Forex News

• XAG/USD confirms a downtrend by breaking below 200, 100, and 50-day moving averages.
• Downtrend signals potential testing of November 13 swing low at $21.88 unless buyers intervene to lift the spot price.
• On the upside, buyers must reclaim $23.00 to challenge and surpass broken DMAs, potentially targeting $24.00.

Silver price is collapsing more than 3% in the day, breaking key support levels on its way south, set to finish the week with losses of more than 9.50%. At the time of writing, XAG/USD is trading at $22.97 after hitting a daily high of $23.89.

XAG/USD’s daily chart confirms the grey metal’s downtrend after breaching the 200, 100, and 50-day moving averages (DMAs), each at $23,49, $23.24, and $23.06. That said unless buyers lift the spot price, that would set the stage for a test of the November 13 swing low of $21.88.

Firstly, XAG/USD sellers must drag prices below a support trendline that passes at around $22.69. Once cleared, the next stop would be $22.00, ahead of the November 13 daily low mentioned above.

Conversely, if Silver buyers reclaim the $23.00 figure, that could pave the way for reclaiming each DMA previously broken. Once those levels are cleared, up next would bet the $24.00 mark.

XAG/USD Price Analysis – Daily Chart

XAG/USD Technical Levels

• GBP/USD hits a new low on Friday after a week of rough downside action.
• Next week sees back-to-back central bank appearances from the Fed and BoE.
• Downside momentum remains a key risk for the GBP heading into the year's final CB rate calls.

The GBP/USD is trying to hold onto 1.2550 heading into the Friday market close after dropping into a new low for the week near the 1.2500 handle after a better-than-expected US Nonfarm Payrolls (NFP) gave the US Dollar (USD) one last bump across the board to round out the trading week.

The Pound Sterling (GBP) spent most of the week underwater, waffling against its higher-profile peers and seeing only moderate gains against its weaker competitors. The GBP/USD pair is down one and a third percent from Monday’s opening bids as US economic releases dominated the data docket this week with a thin showing from the UK. 

Market reactions centered around Federal Reserve (Fed) positioning this week, with investors weighing increased odds of Fed rate cuts coming sooner rather than later on a case-by-case basis, flipping into and out of risk bids as US economic figures beat or miss market data forecasts from one release to the next.

US NFP beats the street, thin UK data keeps the GBP pinned

Friday ended on a USD-positive note after US Nonfarm Payrolls beat expectations once again, showing the US added a net 199K new jobs to the already-tight labor market, above the market forecast of 180K and climbing above October’s print of 150K payroll additions.

November’s ADP Employment Change released earlier in the week showed a below-expectation performance, with ADP reporting a slower pace of new payroll employees of 103K compared to October’s 106K and missing median market forecasts of 130K. The ADP pullback set up over-eager market participants for disappointment with investors leaning heavier into Fed rate cut bets on the back of softening pre-NFP labor data, but Friday’s employment beat muddied the rate expectations waters to wrap up the trading week.

Next week sees a slew of central bank action through the midweek, with the US Fed giving one last rate call for 2023 and updating their inflation outlook dot plot, to be followed by the Bank of England (BoE) and its latest interest rate decision. Both central banks are expected to keep interest rates steady to close out 2023, at 5.5% and 5.25% respectively.

Before central bank action gets underway, next Tuesday brings UK Average Earnings and Claimant Count Change figures; annualized quarterly average earnings are expected to decline from 7.7% to 7.4% in the third quarter, while November is expected to show a slight increase in the number of unemployment benefits seekers from 17.8K to 20.3K.

GBP/USD Technical Outlook

The Pound Sterling shed the 200-hour Simple Moving Average (SMA) early in the week, descending below the 1.2600 handle to remain capped on the low side for the rest of the trading week. The GBP/USD pressed into a new weekly low near 1.2500 on Friday, and heads into the market close struggling to hold onto 1.2550 below the 50-hour SMA.

The GBP/USD fell 1.75% peak-to-trough on the week, and still remains down 1.33% despite a soft rebound from Friday’s new low, although GBP bulls will note that daily candlesticks are seeing technical support from the 200-day SMA rising into the 1.2500 handle, with the 50-day SMA accelerating into the upside from 1.2300.

Despite the week’s declines the GBP/USD is still up 4.3% from October’s early low of 1.2037, and the challenge for bullish bidders will be to stage a technical recovery and muscle the pair back over last week’s high bids just beyond the 1.2700 handle.

GBP/USD Hourly Chart

GBP/USD Daily Chart

GBP/USD Technical Levels

• Gold slips below $2,000 down 0.50% spurred by elevated US bond yields as a consequence of solid data.
• US Bureau of Labor Statistics (BLS) revealed the Nonfarm payrolls surpassed estimates, while the Unemployment Rate ticks down to 3.7%.
• University of Michigan (UoM) data shows increased optimism among American households, inflation expectations downward revised.
• Federal Reserve’s rate-cut expectations for 2024 decline to 118 basis points, according to the Chicago Board of Trade (CBOT).

Gold price retreats below the $2,000 mark for the first time since November 24, extending its losses to 0.50%, spurred by solid data from the United States (US). The XAU/USD is trading at $1996 after hitting a daily high of $2034.00.

XAU/USD’s retreated below $2,000, which could push prices further downwards

XAU/USD’s decline follows the latest US employment report showing the labor market is improving in contrast to recent data revealed during the week. The US Bureau of Labor Statistics (BLS) showed the economy created 199K jobs, exceeding forecasts of 180K, while the Unemployment Rate ticked down from 3.9%  to 3.7%.

That spurred a rally in the Greenback (USD), as shown by the US Dollar Index (DXY), remaining firm 0.40% above its opening price of 104.03, making dollar-denominated commodities more expensive. The US 10-year benchmark note yields 4.237%, eight basis points higher than Thursday’s close.

Additional data from the University of Michigan (UoM) showed that American households remain more optimistic about the economy while seeing an improvement in the battle against inflation as they downward revised inflation expectations.

All that said, traders paired slashed rate-cut bets on the Federal Reserve’s for the following year. Data from the Chicago Board of Trade (CBOT) suggests investors expect 118 basis points of rate cuts for 2024, below last week’s 140 bps. This means market participants see the Fed as less dovish than the previous week.

Aside from this, traders focus on the following week's US inflation report and the Federal Open Market Committee (FOMC) meeting. Inflation is expected to stay at 3.1% in twelve months, and monthly inflation will likely remain at 0%. The Core Consumer Price Index (CPI) is forecasted to stay at 4% unchanged YoY and 0.3% in monthly readings. Regarding the Fed, traders expect the US central bank to keep rates intact.

XAU/USD Technical Levels

• The USD/JPY is paring back some of Thursday's losses, climbing back into the 145.00 handle.
• The US Dollar is fighting back after a steep decline sparked by a hawkish BoJ.
• US NFP figures beat expectations, keeping the Greenback bid through Friday market action.

The USD/JPY is back on the rebound for Friday after posting an extreme backslide on Thursday, climbing four-tenths of a percent from the day's opening bids and looking to pare back losses. The US Dollar (USD) traded flat against the Japanese Yen (JPY) through the early half of the trading week before getting knocked back after the Yen caught a broad-market rally on the back of unusually hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda.

Friday sees the Greenback attempting to claw back chart paper, rising back into the 145.00 handle after a brief dip back into 142.50 at the start of the final trading session of the week.

US Nonfarm Payrolls (NFP) broadly beat the street on Friday, posting a net gain of 199K jobs through November versus the forecast 180K, and climbing over October's net jobs gain of 150K. Broader markets have been ramping up bets of an accelerated path towards rate cuts from the Federal Reserve (Fed), with many market participants expecting the first rate cut from the Fed by as early as next March.

A still-tight US labor market continuing to add more jobs than expected throws a small wrench in the works, bolstered by accelerating Average Hourly Earnings in November, which came in at 0.4% MoM compared to the forecast 0.3%. Worker earnings appear to be gaining in the near term after October printed 0.2% MoM.

Read More: US Nonfarm Payrolls increase by 199,000 in November

Despite the Dollar-positive NFP release, the USD/JPY remains deep in the red for the trading week after the Yen surged in one of its single best trading days in 13 months, fueled by speculation that the BoJ could finally be ending its negative rate regime as the Japanese central bank moves towards tighter monetary policy.

Despite the BoJ fearing a collapse in Japanese inflation sometime in 2025, Japanese Core Consumer Price Index (CPI) inflation continues to run hotter than expected, hitting 2.9% for the year into October and chalking in a nineteenth straight consecutive month of inflation outrunning the BoJ's 2% upper target band.

BoJ Governor Ueda hinted that the BoJ may begin moving to tighten monetary policy if wage growth begins to accelerate heading into 2024, sparking a broad-market bid splurge that sent the USD/JPY tumbling over 4% peak-to-trough on Thursday. The US Dollar recovered some ground, and continues to see a moderate climb heading into the Friday market close, but still remains well off the week's high bids.

Next week will be another Fed watch scenario, with the Federal Reserve delivering their last rate call of 2023, followed by an update to the Fed's 'dot plot', or summary of forward-looking inflation expectations. Any kind of decline in Fed inflation forecasts will likely spark a mark risk relief rally, and could send the US Dollar tumbling even further as investors chomp at the bit for Fed rate cuts.

USD/JPY Technical Outlook

The US Dollar is up four-tenths of a percent against the Yen on Friday, and looking for further upside momentum after climbing from Friday's early low of 142.50. Topside technical resistance from the 50-hour Simple Moving Average sits nearby just beyond the 145.00 handle, with further pressure from the 200-hour SMA descending into 146.75.

Thursday's dip and Friday's moderate recovery sees the USD/JPY setting up a technical bounce from the 200-day SMA just above 142.00, and the trick for Greenback bidders will be to push the pair back towards the 147.00 handle, where they can take a fresh run at the 50-day SMA parked just below the 150.00 major price level.

USD/JPY Hourly Chart

USD/JPY Daily Chart

USD/JPY Technical Levels

• EUR/USD declines over 0.20%, hits daily low of 1.0723 post-US Nonfarm Payrolls; trims losses to 1.0767 after upbeat UoM Consumer Sentiment.
• US Bureau of Labor Statistics reveals a resilient job market, adding 199K employees, lowering the Unemployment Rate to 3.7%.
• University of Michigan (UoM) Consumer Sentiment beats estimates while inflation expectations slide.

The EUR/USD fell decently more than 0.20% during the North American session after it dived to a daily low of 1.0723 courtesy of a slid US Nonfarm Payrolls report. However, after a better-than-expected University of Michigan Consumer Sentiment report, the pair has trimmed some earlier losses. The major is trading at 1.0747.

EUR/USD dropped as US Nonfarm Payrolls exceed estimates, but UoM Consumer Sentiment provides relief

A busy economic calendar in the United States (US) keeps EUR/USD traders entertained. Initially, the Bureau of Labor Statistics (BLS) revealed the economy remains resilient, as the workforce added 199K employees, exceeding the forecast of 180K. At the same time, the Unemployment Rate dropped from 3.9% to 3.7%, while the Average hourly earnings stood unchanged at 4%.

The US Dollar gathered traction on the data’s release, as the EUR/USD dropped toward its daily low before pairing those losses. The US Dollar Index (DXY), which tracks the currency’s performance against six others, registers gains of 0.40%, up at 103.07

The University of Michigan (UoM) Consumer Sentiment recently showed that American households had grown optimistic, snapping four months of declines. The index rose by 69.4, the highest since August, exceeding estimates of 62.0 while inflation expectations slid. Americans estimate inflation in twelve months at 3.1%, down from 4.5%, while for five years, is foreseen at 2.8%, less than November’s 3.2%.

Across the Atlantic, the inflation in Germany slowed to 2.3% as measured by the HICP, below forecasts prior’s month 3%. That has opened the door for a less hawkish reaction by the European Central Bank (ECB), which is expected to hold its monetary policy meeting next week.

EUR/USD Price Analysis: Technical outlook

The EUR/USD daily chart portrays the pair as neutral to downward biased, with sellers in charge, as they dragged the exchange rate below the 100-day moving average (DMA) at 1.0762. A daily close below that level can pave the way toward the 50-DMA at 1.0700. A breach of the latter will expose the November 10 swing low of 1.0655. Conversely, an uptrend resumption could happen if traders reclaim the 100-DMA, opening the door for a rally to 1.0800.

• The AUD/USD is oscillating around the 0.6580 level, reflecting a decline of 0.25%.
• US Labor market data from November showed that wages and job creation increased while Unemployment declined.
• US bond yields made the US Dollar gain interest.

The Aussie dollar (AUD) experienced a dip in its Friday trading session, with the AUD/USD trading lower at approximately 0.6580. The downward movement can primarily be attributed to robust American labor market data, coupled with escalating U.S. yields, which drove demand to the Greenaback

The US Bureau of Labor Statistics data indicated that the November Average Hourly Earnings increased by 0.4% MoM, higher than the 0.3% expected and the previous 0.2%. Moreover, US Nonfarm Payrolls surprisingly jumped to 199K in November from the former 150K, surpassing the forecast of 180K, while the Unemployment rate declined to 3.7% from 3.9%. 

As a reaction, the US Treasury yields are on the rise. The 2-year rate is at 4.70%, while the 5 and 10-year rates are trading at 4.24% and 4.25%, respectively, which favors the strengthening of the USD. In that sense, the strong employment figures have spurred speculations surrounding the Federal Reserve's monetary policy regarding how long the bank will maintain rates at restrictive levels. It's worth noticing that Fed officials left the door open for further tightening as they haven’t seen enough evidence of the economy cooling down, so strong data may delay rate cuts.

Next week, the US will release Consumer Price Index (CPI) figures from November, which will be closely watched by markets.

AUD/USD levels to watch

The AUD/USD daily chart is delivering mixed signals. Despite the negative slope in the Relative Strength Index (RSI) indicating lowered buying momentum in the short term, the indicator is still within the positive territory, suggesting that, overall, bullish sentiment has not entirely dissipated. However, the Moving Average Convergence Divergence (MACD) prints rising red bars, indicating growing bearish momentum.

Although bears appear to be gaining ground recently, the index's placement above its 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) can't be overlooked. This position illustrates that despite short-term selling pressures, the overall trend remains bullish, indicating that the latter maintains a stronghold in the wider context in this tug-of-war between bears and bulls.

Support Levels: 0.6575 (200-day SMA), 0.6560 (20-day SMA), 0.6530.
Resistance Levels: 0.6600, 0.6630, 0.6650.

AUD/USD daily chart

• The US Dollar (Index) jumps over 0.50%, above 104  in the  aftermath of NFP numbers and Michigan Sentiment print.
• Traders see Unemployment rate fall to 3.7%, below 3.9% estimate.
• The US Dollar Index pops back up towards 104.

The US Dollar (USD) is brushing off the Japanese crisis it had on Thursday. At one given point the Japanese Yen was up 4% against the Greenback. The strong US Jobs Report print though, washes off that devaluation and puts the US Dollar back on the map with traders backtracking on earlier bets of quicker cuts from the US Federal Reserve. 

On the economic front, the Unemployment rate is taking up all the attention. A drop from 3.9% to 3.7% is a much telling sign on how strong and tight the labor market still is. The University Prelimenary numbers for December are providing an upbeat Consumer Sentiment, jumping to 69.4, beating 62 in the estimates. 

Daily digest: US unbeatable

• The US Nonfarm Payrolls report mostly in line with some small positive upticks:
  1. Nonfarm payrolls number for November went from 150,000 to 199,000, above the 183,000 consensus.
  2. Monthly Average Hourly Earnings went higher, from 0.2% to 0.4%
  3. Yearly Average Hourly Earnings went a little lower, from 4.1% to 4%.
  4. The US Unemployment Rate for November contracted further from 3.9% to 3.7%
• The University of Michigan has released its preliminary data findings for December:
  1. The Sentiment Index jumped 61.3 to 69.4, beating 62 estimate.
  2. The Inflation expectations went from 3.2% to 2.8%.
• European and US equities are dispersed with European equities being near 1% up on the day. US equities are down with the Nasdaq leading the decline by 0.30%.
• The CME Group’s FedWatch Tool shows that markets are pricing in a 97.7% chance that the Federal Reserve will keep interest rates unchanged at its meeting next week.  
• The benchmark 10-year US Treasury Note jumps to 4.22% and erases earlier pressure on rate cuts. 

US Dollar Index technical analysis: King Dollar making its way back up

The US Dollar is stuck on a crucial crossroads that might trigger either substantially more and longer-term US Dollar appreciation or devaluation. In the runup towards Super Wednesday and Super Thursday when markets will hear from no less than four of the biggest central banks in the world, it looks like the Greenback might reestablish its label as King Dollar. Traders looking for clues would best keep an eye on the spread between the US 2-year yield and the German 2-year yield, which has been getting wider – a situation which is correlated with a stronger US Dollar. 

The DXY is bouncing back up again after the decline on Thursday where the Japanese Yen appreciation was just too much to bear. The DXY could still make it further up, should employment data trigger a spike in US yields again. A two-tiered move – first with NFP and then University of Michigan numbers – could move the DXY back above 104.28, with the 200-day and 100-day Simple Moving Averages (SMA) turned over to support levels. 

To the downside, the 200-day SMA has done a tremendous job in supporting the DXY with buyers coming in below 103.56 and pushing it back towards that same level near the US closing bell. If it fails this Friday, the lows of November near 102.46 is a level to watch. More downside pressure could bring into view the 100 marker, in a case where US yields sink below 4%.

• Gold pulls lower as US Nonfarm Payrolls increase above expectations in November.
• The Precious metal is testing recent lows amid a stronger US Dollar.
• Higher US yields are expected to support the Dollar and weigh on Gold.

Gold price (XAU/USD) has been pulled lower ahead of Friday's European session opening, as the US Nonfarm Payrolls (NFP) report, beat expectations, which has cooled investors' hopes that the Federal Reserve (FED) might stsar cutting rates ahead of schedule.

Nonfarm employment increased in the US In November with 199,000 new jobs, following a 150,000 increase in October, and beating market expectations of a 180,000 reading. Beyond that, wage inflation accelerated at a 0.4% pace, from the 0.2% seen last month.

These figures offset the impact of the US JOLT’s openings and the ADP employment report seen earlier this week and cast doubt about the possibility that the Fed starts rolling back its tightening cycle in March. According to the CME Group Fed Watch tool, chances of a 25 bps cut in March have declined below the 50% level from 55% ahead of the data release.

This is providing a fresh impulse to US Treasury yields and dragging the US Dollar higher. In a short while, the University of Michigan Consumer Sentiment Index is expected to have shown a moderate improvement, which might give a fresh boost to the USD.

Beyond that, the ongoing uncertainty about China and the escalating tensions in the Middle East have provided additional support to the safe-haven Greenback. 

Daily Digest Market Movers: Strong US employment data sends the US Dollar higher and weighs on Gold

• Gold prices are testing support at the $2,000 level after better-than-expected US Nonfarm Payrolls data.
   
• The US economy has created 199K jobs in November, up from 150K in the previous month and beyond market expectations of 180K.
   
• Wage inflation increased at a 0.4% pace in November, twice as fast as in October, beating expectations of a 0.3% rise.
   
• US Payrolls data offsets concerns that the US labor market is losing momentum, which has boosted speculation about a dovish turn in the Fed’s monetary policy outlook.
   
• The CME group's FedWatch Tool shows a 99% chance that the Fed will stand pat at next week’s meeting but bets for a rate cut in March have fallen below the 50% level.
   
• The focus is now on the University of Michigan Consumer Sentiment Index, which is expected to have improved in December and might give a fresh push to the USD.

Technical Analysis: Gold prices approach key support area at $ 2,000 after upbeat US employment data

Gold pices are losing ground against a stronger US Dollar following the release of the US Nonfarm Payrolls report, with the precious metal extending its reversal below the bottom of the recent trading range and nearing the key $2,000 support area.

A confirmation below $2,000 would negate the longer-term upside bias and confirm a Head and Shoulders pattern, often a sign of a trend change, giving bears fresh hopes. Below the $2,00 level, the next targets would be $1,970 and $1,932.

On the upside, immediate resistance remains at $2,040, which is closing the way towards $2,067 and the all-time high, at $2,150.

• WTI Oil trades near $70 and briefly broke below it on Wednesday and Thursday. 
• Oil outlook supports more downside as recent API and EIA data revealed substantial exports from the US 
• The US Dollar (Index) jumps back above 104 in reaction to an positive US Jobs Report. 

Oil prices are daring to advance a touch this Friday after the release of the most recent US Jobs Report. Although the Nonfarm Payroll number was roughly within the benchmark of estimates, printing 199,000 above 183,000 forecasted. It is the unemployment rate decline from 3.9% to 3.7% which is taking away all the attention, and which commodity traders now see as a possible pick up in demand for energy in the coming quarter. 

Meanwhile, the US Dollar (USD) jumps and breaks back above 104. It goes without saying of course that the stronger US Dollar is a result of markets paring back bets on quick and swift cuts from the US Federal Reserve. With still such a tight and growing job market, the Fed is at ease and keep rates elevated for longer as needed to get inflation back to 2%.

Crude Oil (WTI) trades at $70.88 per barrel and Brent Oil trades at $75.55 per barrel at the time of writing. 

Oil news and market movers: Cuts are no Cuts

• Bloomberg analysts have calculated that the announced cuts in the recent OPEC+ meeting will actually not take place as non-participating countries on the production cuts, will be surpassing the reduced volumes by pumping up even more as normal.
• The International Energy Agency (IEA) remains bearish on its outlook for Oil, pointing to still muted demand from China.
• Meanwhile US Shale production has been growing substantially and is one of the main reasons for the massive number in exports from the country on the Oil market.
• Markets and traders need to be on the lookout for any emergency meetings taking place by OPEC or OPEC+, and where more severe measures could be outlined that might trigger a substantial turnaround in the price action. 
• Closing off Friday will be with the Baker Hughes US Oil Rig Count near 18:00 GMT. Previous was 505 with no forecast foreseen.

Oil Technical Analysis: Risk to buy into a pop in a bearish market

Oil prices are facing issues, image issues to be precise. Traders are placing further bearish bets on Oil prices after OPEC+ was unable to put firm measures in place that could support the Oil prices and rather move the needle upwards instead of downwards. As long as OPEC+ can not make a united front, more downside is the only outcome with arch nemesis, the US, dumping millions of barrels per day in an already flooded Oil market. 

On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump above that again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.

On the downside, the soft floor near $74.00 got broken and is gone for now. For now, $70.00 is trying to salvage the situation, though it has been breached already on Thursday and Wednesday. Watch out for $67.00, which aligns with a triple bottom from June, as the next support level to trade at. 

US WTI Crude Oil: Daily Chart

• GBP/USD traded volatile in the data release, though resumed its downtrend.
• US Nonfarm Payrolls figures exceeded estimates; hence traders priced out one Fed rate cut for 2024.
• Traders are eyeing the release of the University of Michigan Consumer Sentiment poll.

The GBP/USD dives 0.50% in early trading during the North American session, sponsored by news showing the economy in the United States (US) remained resilient as the workforce added more jobs than expected. At the time of writing, the major trades at 1.2505, after trading volatile within 1.2578/1.2511 at the news release.

US economy remains stronger than expected, hence the GBP/USD tumbles to new weekly lows

The US Bureau of Labor Statistics (BLS) revealed that 199K jobs were created in November, according to the Nonfarm Payrolls report. Market participants estimated a 180K increase, mainly driven by healthcare gains and auto workers. Digging into the data, the Unemployment Rate ticked lower from 3.9% to 3.7%. Average Hourly Earnings rose as the expected 4% on yearly readings, while month-over-month figures were up to 0.4% from 0.2% a month earlier.

Following the data release, trades had paired US Federal Reserve’s rate cut expectations for the following year. According to data from the Chicago Board of Trade (CBOT), 120 basis points of rate cuts are estimated, 20 bps less than a week ago.

Meanwhile, the Greenback is recovering from Thursday’s losses, as the US Dollar Index (DXY) is up by 0.50%, at 104.15. US Treasury bond yields are climbing from the short to the long end of the curve. The 10-year benchmark note rate is 4.235%, gaining eight basis points.

On the UK front, a scarce economic docket has traders awaiting the Bank of England’s (BoE) next week meeting. Economists expect the BoE to stay pat, though rate cut estimates for 2024 project 80 bps of monetary policy easing.

Ahead in the day, GBP/USD traders are eyeing the release of the University of Michigan (UoM) Consumer Sentiment poll and inflation expectations.

GBP/USD Price Analysis: Technical outlook

Friday’s price action has taken the GBP/USD near the 200-day moving average (DMA), at 1.2488, though it remains above the 1.25 figure. A decisive breach of the latter will expose the previously-mentioned support level, immediately followed by the 100-DMA at 1.2462. Downside risks will be reinforced once those two support levels are taken out, opening the door toward 1.2400. On the flip side, if buyers keep the exchange rate above 1.2500, they could threaten to regain 1.2550.

Nonfarm Payrolls (NFP) in the US rose by 199,000 in November, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed October's increase of 150,000 and came in above the market expectation of 180,000. 

Follow our live coverage of the Nonfarm Payrolls report and the market reaction. 

Other detail of the publication revealed that the Unemployment Rate declined to 3.7% from 3.9% in the same period, while annual wage inflation, as measured by the change in Average Hourly Earnings, held steady at 4% to match analysts' forecast. Finally, the Labor Force Participation Rate ticked up to 62.8% from 62.7%.

"The change in total nonfarm payroll employment for September was revised down by 35,000, from +297,000 to +262,000, and the change for October remained at +150,000," the BLS noted in its press release. "With these revisions, employment in September and October combined is 35,000 lower than previously reported." 

Market reaction to Nonfarm Payrolls 

The US Dollar gathered against its rivals with the immediate reaction. At the time of press, the US Dollar Index was up 0.5% on a daily basis at 104.20.

This section below as published as a preview of the US Nonfarm Payrolls data at 07:00 GMT.

• US Nonfarm Payrolls are likely to rise by 180K in November after October’s 150K increase.
• The US Dollar looks to the headline NFP and Average Hourly Earnings data for a fresh directional impetus.
• The United States employment data will be released by the Bureau of Labor Statistics at 13:30 GMT.

The high-impact Nonfarm Payrolls (NFP) data from the United States (US) will be published by the Bureau of Labor Statistics (BLS) on Friday at 13:30 GMT.

What to expect in the next Nonfarm Payrolls report?

The US labor market report is likely to show that the economy created 180K jobs last month, up from a job addition of 150K reported in October. The Unemployment Rate is set to remain unchanged at 3.9%.

A closely-watched measure of wage inflation, Average Hourly Earnings, is expected to inch higher by 4.0% in the year through November, a tad down from October’s 4.1% increase. On a monthly basis, Average Hourly Earnings are forecast to rise 0.3% in the reported month, compared to a 0.2% increase in October.

The US labor market data is crucial to the US Federal Reserve (Fed) interest rate outlook for 2024 and thus it has a significant impact on the US Dollar (USD) valuation.

Amidst cooling inflation in the US, markets price in that the Fed is done with its tightening cycle, expecting interest rate cuts as early as March. The probability for a March Fed rate cut currently stands at 60%, according to CME Group’s FedWatch Tool.

The Fed rate cut bets rose substantially after Fed Governor Christopher Waller, a known hawk, flagged a policy pivot, spelling doom for the US Dollar and for US Treasury bond yields.

“If the decline in inflation continues for several more months ... three months, four months, five months ... we could start lowering the policy rate just because inflation is lower," Waller said on November 28.

The October Core PCE Price Index data also bolstered dovish Fed expectations. The Fed’s preferred inflation gauge rose 3.5% on the year, moderating from a 3.7% reading while holding well above the Fed's 2.0% target.

In his recent public appearance, Fed Chair Jerome Powell tried hard to push back against expectations of interest rate cuts next year, but markets didn’t buy into his hawkish rhetoric. Powell said, “it would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease.” “We are prepared to tighten policy further if it becomes appropriate to do so,” he added.

On Wednesday, Automatic Data Processing (ADP) said the US private sector payrolls rose 103K in November, compared with October’s downward revision of 106K while missing the estimate of 130K. The Job Openings and Labor Turnover Summary (JOLTS) report showed that the number of job openings on the last business day of October slid to more than a 2-1/2-year low of  8.733 million. 

This week’s US employment data signaled loosening labor market conditions, which if backed by a weak November Nonfarm Payrolls data on Friday could bolster Fed rate cut bets.

Previewing the US labor market data, analysts at TD Securities noted: “Job gains were likely perky in November, with payrolls rebounding above the 200k mark after an October report that surprised expectations to the downside. Gains will partly reflect the ending of the UAW strikes, which had a material impact on manufacturing jobs in the last report. We also look for the UE rate to fall back by a tenth to 3.8%, and for wage growth to print 0.3% m/m.”

How will US November Nonfarm Payrolls affect EUR/USD?

The Nonfarm Payrolls, a significant indicator of the US labor market, will be published at 13:30 GMT. EUR/USD is meandering in the 1.07s in the run-up to the NFP showdown. The US employment data will determine the next directional bias for the main currency pair.

An encouraging NFP headline print and elevated wage inflation could prompt investors to reassess Fed rate cut bets, adding legs to the ongoing US Dollar recovery while dragging EUR/USD back toward 1.0700. Conversely, the US Dollar is expected to see a fresh downswing should the data disappoint and affirm dovish Fed prospects. In such a case, EUR/USD could stage a meaningful turnaround toward 1.1000.

Dhwani Mehta, Analyst at FXStreet, offers a brief technical outlook for trading EUR/USD on the NFP data release. “The main currency pair has broken through all major support levels as the previous week’s bearish momentum sustains ahead of Friday’s payrolls release. The 14-day Relative Strength Index (RSI) indicator is pointing lower below the midline, supporting the recent downtrend.”

Should the selling pressure intensify, EUR/USD could challenge the 50-day Simple Moving Average (SMA) support at 1.0700, below which a drop toward the 1.0650 psychological level cannot be ruled out. The next relevant cushion is seen at the November low of 1.0517. Conversely, Euro buyers need to recapture the 200-day SMA support-turned-resistance at 1.0825 to cement a sustained recovery toward the 1.0900 round level. However, the 21-day SMA at 1.0855 could be a tough nut to crack beforehand,” Dhwani adds.

• The EUR/USD spikes down after better-than expected US payrolls data.
• Nonfarm payrrolls and hourly earnighs increase bayond expectatios in November.
• US data cools holes of Fed cuts and sends the USD higher.

The Euro has dropped more than 40 pips to hit a fresh three-week low below 1.0750 as the US Nonfarm Payrolls report has cooled hopes of Fed rate cuts in early 2024.

Nonfarm Payrolls data cools hopes of Fed cuts

The US economy created 199,000 jobs in November, well above the 1800,00 reading forecasted by market analysts, and up from the 150,000 jobs created in October.

Beyond that, hourly earnings increased at a 0.4% pace, somewhat faster than the 0.3% expected by the market. This reveals that the US labour market remains strong, tackling the doubs triggered by the weak JOLTs and ADP and dampening investors' hopes that the Fed might start easing its monetary policy in March.

The market reaction has supported the US Dollar, sending the EUR/USD to fresh lows below 1.0750 although the pair has trimmed some losses shortly afterwards.

Technical levels to watch