EUR/USD climbs to three-month high after delayed US jobs and Retail Sales data

• EUR/USD climbs to its highest level since late September as the US Dollar stays under pressure.
• Delayed US jobs data shows softer hiring momentum, with unemployment rising to a four-year high.
• Mixed Retail Sales and weaker PMI data reinforce expectations of a cautious Fed policy path.

The Euro (EUR) edges higher against the US Dollar (USD) on Tuesday after brief two-way volatility as traders digested the delayed US labour market and consumer spending data. At the time of writing, EUR/USD is trading around 1.1800, its highest level since September 24, up nearly 0.25% on the day, as the Greenback remains under sustained pressure.

The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) rose by 64,000 in November, modestly beating market expectations for a 50,000 increase. In contrast, October payrolls contracted by 105,000, a sharp reversal from September’s 108,000 gain, which was revised down from an initial estimate of 119,000.

The Unemployment Rate climbed to 4.6% in November, exceeding market expectations of 4.4% and marking the highest level since September 2021. At the same time, the labour force participation rate edged up to 62.5% from 62.4%.

The report also showed that US payrolls were revised down by a combined 33,000 over August and September, echoing remarks from Federal Reserve Chair Jerome Powell, who warned at last week’s post-meeting press conference that job gains since April may have been overstated by around 60,000.

Wage growth showed further signs of easing in November. Average Hourly Earnings rose just 0.1% MoM, falling short of market expectations for a 0.3% increase and slowing sharply from the previous 0.4% gain. On an annual basis, wage growth eased to 3.5% from 3.7%.

October Retail Sales data sent a mixed signal. Headline sales were unchanged on the month, missing market expectations for a 0.1% increase. However, the underlying details were more supportive, with Retail Sales excluding Autos rising 0.4%, while the Control Group jumped 0.8%, comfortably beating forecasts.

Taken together, the mixed US data reinforced the Federal Reserve’s (Fed) cautious approach to further policy easing after delivering 75 basis points of rate cuts this year to support the labour market. While policymakers are widely expected to hold rates at the January meeting, investors continue to price in two rate cuts in 2026.

Against this backdrop, the US Dollar remains under pressure, with the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, hovering near 97.96, its lowest level since October 3.

Adding to the Dollar’s downside, the preliminary S&P Global PMI surveys for December pointed to a loss of momentum in business activity. The Composite PMI slipped to 53.0 from 54.2, while Manufacturing PMI eased to 51.8 from 52.2 and the Services PMI fell to 52.9 from 54.1.