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Euro retreats somewhat on Thursday as traders digest the last round of US jobs data as they also brace for the release of the Federal Reserve’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index. At the time of writing, the EUR/USD trades at 1.1649, down 0.19%.

EUR/USD poised for further upside on possible Fed rate cut
 

The financial markets narrative hasn’t changed, as investors are waiting for December 10, the Fed’s D day. Economic data in the US was a tailwind for the Dollar, as Initial Jobless Claims for the week ending November 29 dipped sharply, an indication that the labor market is still firm.

Contrarily, the Challenger Jobs Cut data reported that employers cut over 70,000 jobs in November, its highest level for that month since 2022.

Given the fundamental backdrop, traders priced in an 85% chance for a Fed rate cut next week. Nevertheless, this could change if the release of the Fed’s favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index for September, surpasses the 3% threshold on Friday.

For the Euro, the main supporter is the European Central Bank (ECB) which set interest rates at around 2%, hinted that the easing cycle was over and Lagarde’s remarks on Wednesday, when she said, “inflation to stay near 2% in months ahead.”

Data-wise Retail Sales in the Eurozone exceeded estimates in October, and Construction PMI readings for the EZ, Germany, France and Italy, improved, despite remaining in contractionary territory.

Daily market movers: Euro boosted by Lagarde’s comments, weak Dollar
 

• The Dollar is poised to weaken further, yet as of writing, the US Dollar Index (DXY), which tracks the buck’s performance against six major currencies, gains 0.19% up at 99.05.
• Initial Jobless Claims for the week ending November 29 were 191K, lower than the estimated 220K and last week's revised 218K. Continuing Claims for November 22 fell to 1.939 million from 1.943 million the prior week.
• According to Challenger, Gray & Christmas, employers reported 71,321 job cuts in November. This figure represents a 24% increase compared to the same period last year, but a 53% decrease from the number recorded in October of this year.
• ECB’s President Lagarde added that the EZ economy is in good shape due to a steady household spending and a resilient labor market. The central bank is expected to hold rates unchanged at the December 18 meeting.

Technical analysis: EUR/USD holds steady within new range amid fading momentum
 

The EUR/USD despite dipping, remains stable at around the 1.1650 area for four consecutive sessions, establishing a new trading range between this threshold and 1.1700. Buying momentum has faded as depicted by the Relative Strength Index (RSI), putting in danger a possible test of the 1.1800 figure, before traders could challenge the year-to-date (YTD) high at 1.1918.

Should the EUR/USD decline below 1.1650, initial support is provided by the 50-day Simple Moving Average (SMA) at 1.1610, followed by the 20-day SMA at 1.1589, and subsequently at 1.1500.
 

EUR/USD daily chart

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