Chart of the day - EURUSD (08.12.2023)

Today's release of the US NFP report could bring increased volatility to the currency market. A potentially stronger-than-forecast report could mean declines on the EURUSD. The market expects a higher-than-expected change in US employment, which is expected to be more than 180,000 against 150,000 in the previous month. Admittedly, these expectations seem quite optimistic, looking at the published data from the Challenger report, JOLTS and ADP, which brought disappointment. Only yesterday's claims turned out to be in line with market expectations and brought a slight increase to 220k against the previous reading of 218k. It seems that today's reaction to the NFP will determine the trend on the pair at least until the Fed meeting on December 13, next week (Wednesday). 

EURUSD chart (M30)

Looking at the EURUSD chart, we have seen a bullish reversal pattern on the daily candles recently, and the pair halted the declines in the key for buyers area of 1.076. On the other hand, however, the rebound took place on relatively low volume, and the pattern may be negated if the Eurodollar tests the 1.076 area once again. Yesterday declines accelerated after reaching the 38.2 Fibonacci retracement of the mid-October upward wave, near 1.082. Currently, we see the pair close to 1.078 roughly 1.5 hours before the publication of the NFP at 1:30 PM GMT.

Looking at the extent of previous downward trend corrections, if the 1:1 structure were to be preserved, even the scenario of a test of the area around 1.07, where the 61.8 Fibonacci retracement of the mid-October 2023 upward wave is located, seems realistic. On the other hand, a lower-than-expected NFP reading could reassure the market that the US labor market is starting to cool at a faster pace, leading to pressure on the dollar and an increase in bets on a faster easing of Fed policy, in 2024. The first significant resistance here appears to be the previously mentioned area of 1.082, where we see the 38.2 retracement of the upward impulse according to the Fibo methodology.

Source: xStation5