**EUR/USD Finds Support Above 1.1700 As US Dollar Weakens Ahead of Key NFP Data**
*Original article by FXStreet News Team*
The euro (EUR) maintained its bullish footing against the US dollar (USD) in advance of the much-anticipated Non-Farm Payrolls (NFP) report, as the EUR/USD pair found solid support above the psychological 1.1700 level in Thursday’s North American trading session. A mix of better-than-expected economic data from the Eurozone and a softer US dollar tone shaped investor sentiment, pushing the common currency higher even amid cautious market positioning ahead of major labor market data from the United States.
This article offers a comprehensive breakdown of recent EUR/USD price movements, key macroeconomic indicators shaping the narrative, expert analysis, and what traders should watch as the week concludes.
## EUR/USD Maintains Upside Momentum
The EUR/USD currency pair hovered near three-week highs above 1.1700, as dollar bulls took a breather following a turbulent midweek session. A combination of eurozone resilience and diminished yield support for the dollar triggered fresh buying interest in the euro. Despite the proximity of Friday’s crucial US employment report, traders appeared confident in their preference for risk-sensitive currencies, dampening demand for the greenback.
– The pair climbed steadily from lows near 1.1650 earlier in the week.
– Resistance now lies in the 1.1740–1.1760 region, with further upside possible if jobs data disappoints.
– The 1.1700 handle continues to act as a key psychological support zone.
## Weaker US Dollar Sets Risk-On Tone in Markets
The US Dollar Index (DXY), a gauge that tracks the dollar against a basket of major currencies, retreated further as global optimism and risk appetite picked up. Softer US Treasury yields and expectations that the Federal Reserve may not accelerate tapering of its bond purchasing program contributed to a weakening dollar.
– The DXY retreated from highs above 93.70 seen earlier in the week, falling below 93.50 on Thursday.
– Investors took profits on long dollar positions initiated on hawkish Fed commentary in recent weeks.
– Declining Treasury yields placed additional downside pressure on the greenback as inflation fears began to ease.
Market participants increasingly believe that the Fed may adopt a patient approach to tapering, especially after recent signs that inflation may be stabilizing and concerns about the Omicron variant diminishing economic momentum.
## European Data Underpins Euro Strength
Economic data out of the Eurozone helped provide further support to the euro. Retail sales and services PMI data surprised to the upside, reinforcing the belief that the Eurozone economy remains on a steady recovery path despite the pandemic-induced slowdown earlier in the year.
Key economic highlights:
– Eurozone Services PMI for November came in at 55.4, exceeding expectations of 53.5 and marking an increase from the previous 54.6.
– Retail sales data showed a monthly gain of 0.3 percent in October, beating forecasts of zero growth.
– Core inflation remained muted, which may keep ECB policy dovish but supports consumer confidence.
Additionally, headlines from European Central Bank (ECB) members suggest no urgency to raise interest rates, but policymakers appear less concerned about additional stimulus. These subtle shifts in tone have sparked some optimism among euro bulls.
## Traders Stay Cautious Ahead of US NFP Data
Despite the general optimism in favor of the euro, cautious sentiment remains due to the impending release of the US jobs report. Set to be released Friday, the NFP report is a critical indicator of US labor market health and could shape Fed expectations going into 2024.
Analysts expect the November Non-Farm Payrolls to show a gain of approximately 550,000 jobs, a solid rebound from the previous month’s print of 531,000. A stronger-than-expected print could revive interest rate hike expectations among investors, boosting the US dollar
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