Forex technical view: FX majors poised as US data loom
As North American markets open, the three major currency pairs are flashing notable technical signals ahead of the US nonfarm payrolls release at 8:30 AM, with additional releases on tap for US retail sales and the December flash PMI later today. The October jobs data were delayed due to the government shutdown, making the upcoming figures the first major look at the labor market in some time. Here’s what to watch and why it matters.
Forecasts for the US jobs report:
- Nonfarm payrolls: up by about 50,000
- Unemployment rate: seen at 4.4%, unchanged from September
- Average hourly earnings: up 0.3% month over month, 3.6% year over year
Retail sales projections:
- MoM: +0.1% vs. +0.2% in September
- Ex autos: +0.3% vs. +0.3% in September
- Control group: +0.4% vs. -0.1% in September
The weekly ADP employment report is due at 8:15 AM ET. Last week, the ADP figure returned to positives, averaging 4.75k additions.
In the FX space as the NA session begins, EURUSD nudges higher to around 1.1765, up roughly 0.11% for the session, remaining above the mid-range after oscillating between 1.1745 and 1.1769. This keeps a modest buyer presence as long as the 1.174–1.177 zone holds.
USDJPY trades softer near 154.73, down about 0.31%, with sellers pressing toward a swing-support region around 154.33–154.48. It remains under the 100-period moving average on the 4-hour chart, hinting at growing downside momentum unless buyers reclaim higher levels.
GBPUSD leads the pack among the three, trading near 1.3430 and higher by roughly 0.43%. A stronger PMI backdrop supports a push toward last week’s high around 1.3438, signaling ongoing bullish momentum as buyers lift the pair from a low near 1.3356.
The video above features Greg Michalowski outlining the bias, risks, and targets for each pair as the North American session unfolds, focusing on technical setups and near-term scenarios.
Fundamental backdrop: UK PMI data for December surprised to the upside, with Manufacturing PMI at 51.2 (ahead of 50.4 expected) and Composite PMI at 52.1 (ahead of 51.6). The data point to firmer activity and the strongest rise in new business in 14 months, suggesting a potential GDP uptick around 0.2% for December. Yet, this optimism sits alongside weaker official GDP readings from the prior week, underscoring underlying fragility in the economy.
S&P Global commentary highlighted soft underlying growth, ongoing employment softness, and a renewed rise in price pressures across goods and services as costs rise. This keeps the Bank of England on a cautious trajectory toward rate cuts, with growth softness and lingering inflation risk likely to temper any overly dovish stance. Policymakers are expected to stay data-dependent, prompting markets to rethink excessively dovish pricing.
Europe’s flash PMI released a mixed picture, with pockets of improvement in manufacturing but softer activity in services across key economies.
- France Manufacturing PMI: 50.6 (vs 48.1 expected) – better than last month
- France Services PMI: 50.2 (vs 51.1) – softer than last month
- Germany Manufacturing PMI: 47.7 (vs 48.6) – softer than last month
- Germany Services PMI: 52.6 (vs 53.0) – softer than last month
- UK Manufacturing PMI: 51.2 (vs 50.3) – stronger than last month
- UK Services PMI: 52.1 (vs 51.6) – stronger than last month
US stocks are broadly flat to modestly firmer at the open, while yields edge lower:
- Dow Jones Industrial Average: little changed
- S&P 500: down modestly
- Nasdaq Composite: down modestly
US government bond yields are mostly lower across the curve:
- 2-year: about 3.505%
- 5-year: around 3.719%
- 10-year: near 4.164%
- 30-year: around 4.832%
Bottom line: The coming US data flow—especially the nonfarm payrolls and retail sales—will be pivotal for short-term dollar direction and for recalibrating expectations around inflation and policy. While technicals point to selective strengths in EURUSD and GBPUSD, and a patchy risk environment elsewhere, traders should watch the 1.174–1.177 area for EURUSD and the 154.3–154.5 zone for USDJPY as potential pivot points. The Pound remains the standout among the majors on the back of stronger PMI signals, suggesting room to test higher levels if momentum persists.
Controversy and questions to consider: Should we read the UK PMI strength as a durable green shoot for UK growth or a temporary blip driven by services demand and cost pressures? Is the European services slowdown enough to cap euro gains even if manufacturing steadies? And with mixed data, will the market’s worry about policy path in the US and UK be resolved by today’s numbers or by the more uncertain PMI outlooks ahead? Share your take in the comments: do these headlines confirm a shift in central bank bias, or do they simply reinforce the status quo?
