The EUR/USD pair is wavering in early trading ahead of the important nonfarm payroll (NFP) data from the United States. It is trading at 1.2142, which is a few pips below this week’s high of 1.2173. It is also at the highest it has been in more than two years.
The Bureau of Labour Statistics (BLS) will release the official nonfarm payrolls later today. The consensus among analysts is that the labour market was relatively softer in November as the country dealt with the new wave of the pandemic.
Precisely, analysts believe that the US added more than 469,000 jobs in November, the fifth straight months of gains. This, however, will be lower than the previous month’s increase of more than 638,000.
At the same time, they believe that the unemployment rate fell to 6.8% while wage growth continued being subdued. Similarly, economists expect the participation rate will rise from 61.7% to more than 62%.
In normal cases, better NFP data would be bearish for the EUR/USD price and vice versa. But we are in extraordinary times where there are more moving parts. For example, today, we will probably know whether the UK and the EU will reach a Brexit deal. Also, we are in a period of risk-on sentiment as countries start preparing to vaccinate their people.
Turning to the four-hour chart, we see that the EUR/USD pair is trading at 1.2142 and has been on a strong upward rally. This trend is supported by the 50-day and 25-day exponential moving averages (EMAs). Notably, the average directional index, which is a strong measure of the strength of the trend, has risen to a high of 42. Further, the price has formed a bullish consolidation pattern.
Therefore, I believe that the pair will break-out higher, with the next target being at 1.2150. For this trade, the support will be at 1.2100.
