EUR/USD, GBP/USD Under Pressure Following Robust US NFP Report

The US dollar strengthened against major currencies following a robust US employment report for October. Nonfarm payrolls increased by 165,000, significantly exceeding the forecast of 65,000 and the prior reading of 60,000 (revised up from 29,000). Private sector payrolls added 159,000 jobs against expectations of 64,000, bringing the three-month average up to 137,000 from 79,000. Upward revisions to August (to 186,000 from 133,000) and September added an additional 84,000 jobs, signaling strong overall labor market momentum.

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Unemployment ticked down to 4.1% against forecasts of 4.2%, with total unemployed falling to 7.07 million as labor force participation rose to 61.9% from 61.8%. Average hourly earnings grew 0.4% month-on-month (versus 0.3% expected) and accelerated to 3.1% year-on-year, with the average workweek holding steady at 34.4 hours. Sector gains were led by professional and business services (+70,000), healthcare (+42,000), transportation and warehousing (+25,000), and manufacturing (+19,000).

Monetary Policy Outlook and Currency Divergence

With the federal funds rate currently at 3.75–4.00%, the strong labor figures diminish the case for a Fed rate pause, reinforcing market expectations for rate hikes in December and March. Cleveland Fed President Beth Hammack recently indicated that monetary policy will likely need to shift to a restrictive stance to return inflation to the 2% target on time, aligning with her vote alongside Lisa Cook for a rate increase on October 28.

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In contrast, Eurozone economic indicators remain soft. Eurozone retail sales fell 0.7% month-on-month in September (versus -0.1% expected), slowing annual growth to 0.4%. With the ECB deposit rate at 2.50%—1.25 to 1.50 percentage points below the Fed rate—the base case assumes a final hike to 2.75% in December. The British pound also lost ground despite the Bank of England raising its key rate to 4.00% in a unanimous 9–0–0 vote on November 5. BoE Governor Andrew Bailey noted that another rate increase is more likely than not if energy prices rebound, leaving a December rate move priced at a 50/50 probability.

EUR/USD Technical Analysis

EUR/USD buyers face immediate resistance at 1.1175. Clearing this level would open the path toward 1.1210, with a broader target at 1.1245 requiring substantial bullish momentum. On the downside, initial support sits at 1.1140. A break lower could trigger a retest of the 1.1110 low, with extended downside support located at 1.1080.

GBP/USD Technical Analysis

For GBP/USD, buyers must overcome resistance at 1.3380 to reach 1.3410 and potentially the 1.3435 region. Conversely, bears are targeting support at 1.3345. A decisive break below 1.3345 would weaken the bullish structure, risking further declines toward 1.3320 and 1.3300.

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