Ahead of US NFP Data, EUR/USD Obtains Traction Near 1.0600 Today

On Thursday morning, the EUR/USD pair surges above 1.0580 during the early Asian session. The major pair gains some support from the subdued US Dollar (USD) following the Federal Open Market Committee (FOMC) policy meeting. Presently, EUR/USD is trading near 1.0597, an increase of 0.26% on the day.

As anticipated, the FOMC maintained the federal funds rate between 5.25 and 5.50% on Wednesday. In order to influence monetary policy, Fed Chair Jerome Powell stated during the press conference that the increase in long-term yields must be sustained and propelled by higher-term premiums. Powell added that the existing monetary policy is already excessively restrictive. FOMC leaves the door open for a further rate increase, but it appears unenthusiastic. Following the meeting, the Greenback declined as markets anticipated that the cycle of rate hikes had concluded.

The United States private sector payroll growth for October increased marginally but fell short of expectations on Wednesday. From September's 89,000, the number increased by 113,000, which was less than the market consensus of a 150k increase. In contrast, the number of job openings for JOLTS unexpectedly increased to 9.553 million, surpassing expectations of 9.25 million. In October, the ISM Manufacturing PMI recorded its lowest reading since July, falling to 46.7.

Conversely, the European Central Bank (ECB) maintained interest rates unchanged last week and is anticipated to begin interest rate reductions in the second quarter of the following year. The stagnant GDP growth was the cause of the disinflationary pressures, and the PMI data further indicated increased risks of recession.

The initial reading of the Eurozone Harmonised Index of Consumer Prices (HICP) for October was 2.9% year-on-year (YoY) this week, which was lower than the market consensus of 4.3%. From 4.5% to 4.2%, the Core HICP decreased from its preceding value of 4.5%. In addition, the Gross Domestic Product (GDP) of the Eurozone for the third quarter (Q3) decreased to -0.1% QoQ from the previous estimate of a 0.1% expansion. Annual growth rates increased by 0.1%, compared to 0.5% previously. Both growth figures, however, fell short of market expectations.

On Thursday, market participants will closely observe the HCOB Manufacturing PMI for Italy and Spain, as well as the German unemployment rate. Traders will also glean additional motivation from ECB Lane's speech. The US weekly Initial Jobless Claims will be due on the US docket. On Friday, attention will transition to the US Nonfarm Payrolls, which are projected to increase by 180,000 positions in October. These events may provide the EUR/USD pair with a distinct trajectory.