The United States (US) Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) data for December on Friday at 13:30 GMT.
The US Dollar (USD) will likely experience heightened volatility as the employment report could provide key clues about how the Federal Reserve (Fed) will approach policy-making in the new year.
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What to Expect From the Next Nonfarm Payrolls Report?
Economists expect Nonfarm Payrolls to rise by 60,000 in December following the 64,000 increase recorded in November. In this period, the Unemployment Rate is seen edging lower to 4.5% from 4.6%, while the annual wage inflation, as measured by the change in the average hourly earnings, is forecast to tick up to 3.6% from 3.5%.
The monthly report published by the Automatic Data Processing (ADP) showed that private sector payrolls rose by 41,000 in December following the 29,000 decline recorded in November.
Additionally, the Employment Index of the Institute for Supply Management’s Services Purchasing Managers’ Index (PMI) climbed to 52 after staying in contraction territory, below 50, for six consecutive months.
Previewing the employment report, TD Securities analysts said:
How Will the US December Nonfarm Payrolls Data Affect EUR/USD?
The US Dollar ended the year on a bullish note and kept its footing to begin 2026. Although the Fed adopted a dovish stance at the December policy meeting, market participants see a strong chance of the US central bank to hold the interest rate unchanged at the January meeting.
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According to the CME FedWatch Tool, investors are currently pricing in a less than 15% chance of a 25-basis-point rate cut this month. Nevertheless, the employment data could still influence the odds of a rate cut in March, which currently stands around 45%, and trigger a significant market reaction.
Earlier in the week, Richmond Federal Reserve Bank President Thomas Barkin said rate decisions will need to be “finely tuned,” given risks to both unemployment and inflation goals. Barkin noted that the unemployment remains low, but added that they don’t want the job market to deteriorate further.
Meanwhile, Minneapolis Fed President Neel Kashkari said that the job market is clearly cooling and added there is a risk the Unemployment Rate can “pop from here.” Rabobank analysts note that the market will be looking to fine-tune its expectations regarding the timing of the next Fed rate cut.
A significant upside surprise in NFP, with a reading above 80,000, combined with a drop in the Unemployment Rate, could cause investors to lean toward another policy hold in March and boost the USD with the immediate reaction. In this scenario, EUR/USD could come under heavy bearish pressure heading into the weekend.
Conversely, a disappointing NFP print of 30,000 or less could trigger a USD sell-off and allow EUR/USD to turn north. Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
Source: https://beincrypto.com/us-nfp-fed-impact-eur-usd-forecast/
