• EUR/USD rises 0.60%, boosted by frail US employment data and hopes ahead of the Nonfarm Payrolls release.
• Political uncertainty persists in France as the government faces its first overthrow of a no-confidence vote since 1962.
• Investors are weighing mixed euro zone retail sales against Fed Chairman Powell’s cautious but balanced economic outlook.

The EUR/USD rate recovered from the political turmoil in France and increased by over 0.60% on Thursday. US payrolls data were weaker than expected, while investors expect US nonfarm payrolls data to be released on Friday. The pair is trading at 1.0578 after rebounding from daily lows of 1.0505.

Euro gains against dollar, reaching 1.0578 as US jobless claims rise and trade deficit narrows

The U.S. Department of Labor reported that unemployment claims for the week ending Nov. 30 rose by 9,000 to 224,000, above the median estimate of 215,000. The 4-week moving average was 218.3 thousand.

At the same time, the US Bureau of Economic Analysis (BEA) revealed that the US trade deficit in October decreased to -73.8 billion dollars from -83.8 billion dollars in the previous month.

EUR/USD extended its gains after the data release, clearing the 1.0540 area and rising to an intraday high of 1.0589 before paring some of its gains.

Nevertheless, the euro bulls are not out of the woods yet, as the French government lost a no-confidence vote for the first time since 1962. Prime Minister Michel Barner was ousted with 331 votes in favor of his removal. Despite this, the current government will remain in office because, according to the French constitution, recent elections can only take place one year after the previous ones, i.e. until the summer of 2025.

The euro zone revealed that October retail sales topped the median estimate of 1.7%, which was up 1.9% y/y, but was lower than September’s growth of 3%. On a monthly basis, sales fell from 0.5% to -0.5%, well below expectations of a -0.3% decline.

Federal Reserve Chairman Jerome Powell sounded “somewhat hawkish” on Wednesday, adding that the economy remains in good shape, that the balance between implementing the central bank’s dual mandate is balanced and that there is no urgent need to cut interest rates.

This week, the report will feature non-farm payrolls data for November, which is expected to show that the economy added 200,000 jobs. jobs, and the unemployment rate is expected to enhance to 4.2%.

EUR/USD Price Forecast: Technical Outlook

Despite some recovery, EUR/USD buyers need to stay above 1.0600. Failure to do so would exacerbate a retest of the weekly lows of 1.0460 reached on Monday. But first, investors will face the 1.0500 level and if these two levels are broken, a retest of the yearly low at 1.0331 is expected.

Otherwise, if EUR/USD extends its gains above 1.0600, the next major resistance will be the June 26 low at 1.0666.