The EUR/USD pair managed to close Friday on a positive note despite a sharp pullback seen on the back of stronger-than-expected U.S. nonfarm payroll data. By the close, the EUR/USD pair was trading at 1.0540, with a 0.13% daily gain and a 1.5% weekly advance, the second in a row.
The greenback enjoyed a short-lived spike, alongside U.S. bond yields, following the release of the government jobs report. The nonfarm payrolls report showed the economy created 263,000 jobs in November, above the 200,000 expected, while October’s reading was upwardly revised. The unemployment rate remained unchanged at 3.7%.
Solid jobs data spread doubts about the Fed slowing down the pace of rate increases in December. Investors are now pricing a 10% higher probability of a 75 bps hike for the next FOMC meeting. However, according to the WIRP tool, a 50 bps hike continues to be the strongest case.
From a technical perspective, the EUR/USD short-term bias remains bullish as the shared currency continues to trade above its main moving averages while indicators stand in positive territory. However, the RSI is already pointing at overbought conditions, which could give way to a phase of consolidation before another leg higher.
On the upside, the next resistance levels are seen at the five-month highs scored this week at the 1.0545 zone, ahead of late-June highs around 1.0600-15. On the downside, the next support levels are seen at the 1.0420 area, followed by the 200- and 20-day SMAs at 1.0365 and 1.0315, respectively.