EUR/USD Slightly Up Ahead of Key Economic Data

The EUR/USD pair edged up a bit after a stagnant day, hovering around 1.1540 during Asian trading hours on Friday. Traders are looking forward to the preliminary HOCB Purchasing Managers’ Index (PMI) for November concerning Germany and the eurozone, which is set to be released soon. In the later hours of North American trading, attention will also shift to S&P Global PMI data from the US.

The EUR/USD remains stable as the US dollar falters for the first time in five days, following the release of September jobs data, which has led to heightened expectations that the Federal Reserve might lower interest rates in December. Currently, financial markets are estimating a 36% probability that the Fed will cut the overnight borrowing rate by 25 basis points at their December meeting. This is an increase from a 30% probability noted the previous day, as indicated by the CME FedWatch tool.

In September, US nonfarm payrolls (NFP) rose by 119,000, a notable increase compared to a revised decrease of 4,000 in August, which had been shifted from a previously reported gain of 22,000. This new figure surpassed market projections of 50,000. However, the unemployment rate climbed to 4.4% in September from 4.3% in August. On the earnings front, average hourly wages remained at 3.8% year on year, slightly above market expectations of 3.7%.

The euro has held steady amid a cautious outlook on the European Central Bank’s (ECB) monetary policy in the short term. With inflation lingering around its 2% target, economic growth remaining stable, and unemployment at historical lows, many analysts believe the ECB will likely keep interest rates unchanged until the end of 2026.

Gabriel Makhlouf, a member of the ECB Governing Council and the Governor of the Central Bank of Ireland, remarked on Thursday that the current monetary policy is suitable and that no adjustments are foreseen unless significant changes occur in the economic landscape.