FOREX Review: Euro Rises Awaiting Fresh Signals from US
The euro continues to strengthen in the international currency FOREX market. The main supporting factor for the European currency has been the weakening of the US dollar, which investors have been selling for a second straight trading day. Against this backdrop, the EUR/USD pair is getting a chance to move higher, although the euro's further dynamics will largely depend on US economic statistics.
Dollar sales reflect caution among market participants and a reassessment of expectations regarding the future policy of the US Federal Reserve (Fed). Investors are assessing the prospects for the American economy and the likelihood of interest rate changes. If economic indicators turn out weaker than forecasts, this could strengthen expectations of Fed monetary policy easing and put additional pressure on the American currency.
The political factor also provides additional support to the euro. After the US midterm elections, in which Democrats gained a majority in both chambers, the dollar came under pressure. The market expects increased political confrontation within Washington and reduced uncertainty regarding the US foreign policy course. On Thursday, November 5, the dollar index dropped to around 101.41 points, and the euro rose to the $1.1241 mark.
Main Event for the Currency Market — Friday's US Employment Statistics
On November 6 at 15:30 Kyiv time, the US Department of Labor will release the October Employment Situation report. Investors' focus will be on:
- the number of new jobs outside the agricultural sector (Nonfarm Payrolls);
- the unemployment rate;
- average hourly wage dynamics.
According to preliminary expectations, the American economy may have created about 65 thousand new jobs compared to 29 thousand in September.
The release results could significantly change the direction of EUR/USD movement.
If employment turns out weaker than forecast and unemployment rises, the dollar may continue to decline. This would strengthen expectations of a softer Fed policy and create conditions for further euro strengthening.
In the opposite case, if the American labor market shows unexpectedly good results, the dollar could quickly recover. Strong statistics would reduce the likelihood of imminent Fed policy easing and could trigger a downward correction in EUR/USD.
Thus, the euro is currently benefiting from the American currency's weakness, but continued growth is by no means guaranteed. Until Friday's statistics release, the dollar may remain under pressure, but the US employment report will be the main guide for FOREX and could determine the further direction of the European currency's movement.
