The EUR/USD currency pair remains stable above the critical threshold of 1.1700, trading at approximately 1.1739 as of Monday. This stability comes as the US Dollar continues to weaken, driven by investor anticipation for the forthcoming Nonfarm Payrolls report set to be released on Tuesday. The Dollar Index (DXY), which measures the value of the US Dollar against a basket of major currencies, has experienced a decline of 0.10%, marking its third loss in four sessions.
Commentary from Federal Reserve officials has varied, contributing to mixed market sentiments. Fed Governor Stephen Mira expressed a dovish outlook, while Susan Collins, the President of the Boston Federal Reserve, maintained a neutral stance. In contrast, John Williams, President of the New York Federal Reserve, indicated a slightly hawkish position, suggesting that monetary policy has shifted toward a neutral state. Market participants are closely monitoring the upcoming Nonfarm Payrolls and Retail Sales data, as these reports are crucial for shaping expectations regarding the US Dollar and Federal Reserve policy.
Traders are particularly focused on the anticipated November Nonfarm Payrolls, which are projected to reflect job gains of around 40,000, with the unemployment rate expected to remain steady at 4.4%. Additionally, the October Retail Sales figures are forecasted to show a modest increase of 0.2% month-on-month, unchanged from September.
Impact of Federal Reserve Commentary
Recent statements from Federal Reserve officials have further influenced market dynamics. The Fed cut interest rates for the third time in 2025, reducing the target range to 3.50%–3.75%. Fed Chair Jerome Powell hinted that policymakers might pause the easing cycle as the economy adjusts to the cumulative 75 basis points in rate cuts implemented this year. Collins emphasized that inflation risks are lower than previously assessed, supporting the latest rate cut.
Williams reiterated the importance of returning inflation to the 2% target, noting that businesses seem hesitant to either hire or dismiss employees. He anticipates the unemployment rate to hover near 4.5% by the end of the year, with inflation expected to reach the target by 2027.
European Economic Outlook
On the European front, a recent Reuters poll indicates that economists expect the European Central Bank (ECB) to maintain its current interest rates through 2026, as inflation is likely to remain subdued while the economy shows resilience. As the ECB prepares for its December 18 meeting, it is widely anticipated that rates will remain unchanged.
The current performance of the Euro against major currencies has been notable. So far this month, the Euro has strengthened against the US Dollar, with a reported increase of 1.32%. The Euro’s resilience has contributed to its position as the second most traded currency globally, accounting for approximately 31% of all foreign exchange transactions in 2022.
The technical outlook for EUR/USD suggests a neutral-to-bullish bias. If the pair can close the week above 1.1700, momentum indicators will likely support this upward trend. A breakthrough above the recent high at 1.1762 could pave the way towards 1.1800, and possibly 1.1850.
Investors will closely monitor the outcomes of the Nonfarm Payrolls and Retail Sales reports, as these will significantly influence future Federal Reserve actions and the trajectory of the US Dollar. As market participants await these crucial economic indicators, the EUR/USD pair appears poised for potential movement in response to the evolving economic landscape.
