EUR/USD climbs on weak US jobs data, NFP eyed

• EUR/USD surges 0.60%, boosted by soft US jobs data and hopes ahead of Nonfarm Payrolls.
• French political uncertainty persists as the government faces its first no-confidence vote ouster since 1962.
• Investors weigh mixed Eurozone retail sales against Fed Chair Powell’s cautious yet balanced economic outlook.

The EUR/USD shrugged off political turmoil in France and edged up by over 0.60% on Thursday. US jobs data came weaker than expected, while investors expect the release of US Nonfarm Payrolls figures on Friday. The pair trades at 1.0578 after bouncing off daily lows of 1.0505.

Euro gains against the Dollar, reaching 1.0578 as US jobless claims rise and trade deficit narrows

The US Department of Labor revealed that Initial Jobless Claims for the week ending November 30 rose by 9k to 224k, above the median estimate of 215k. The 4-week moving average stood at 218.3k.

At the same time, the US Bureau of Economic Analysis (BEA) revealed that the US trade deficit in October narrowed to $-73.8 billion from $-83.8 billion in the previous month.

The EUR/USD extended its gains following the data release, clearing the 1.0540 area and rising to a daily peak of 1.0589 before paring some of its gains.

Despite this, Euro bulls are not out of the woods yet, as the French Government lost a no-confidence vote for the first time since 1962. Prime Minister Michel Barner was ousted with 331 votes in favor of his removal. Despite this, the existing Government will remain in place, as under the French constitution, a new election can’t happen until a year after the last one, until the summer of 2025.

The Euroarea revealed that Retail Sales in October exceeded the median estimate of 1.7%, which came at 1.9% YoY but below September’s 3% increase. On a monthly basis, sales dropped from 0.5% to -0.5%, well below expectations of a -0.3% contraction.

On Wednesday, Federal Reserve Chair Jerome Powell was “slightly hawkish,” adding that the economy remains in good shape, that the balance between achieving the central bank’s dual mandate is balanced, and that there is no urgency to cut rates.

This week, the docket will feature nonfarm payroll figures for November, which are expected to show that the economy added 200K jobs while the unemployment rate is expected to rise to 4.2%.

EUR/USD Price Forecast: Technical outlook

Despite recovering some ground, EUR/USD buyers need to drive the exchange rate above 1.0600. If they fail to do so, it will exacerbate a retest of the weekly lows of 1.0460, hit on Monday. But first, traders will face 1.0500, and if those two levels are cleared, a re-test of the yearly low of 1.0331 is on the cards.

Otherwise, if EUR/USD extends its gains past 1.0600, the next major resistance would be the June 26 swing low of 1.0666.