Partial data from the US labor market indicates a solid pace of employment growth in November. The unemployment rate at 4.1 % is already at the level that the Fed forecasts for the next two years, so a further drop will be an argument for more hawkish comments. However, the salary growth remains the most important factor, where expectations are high. However, the sensitivity of the US Dollar will be higher in case of a weaker reading.

In October, non-farm payrolls (NFP) employment increased by as much as 261,000, reflecting recovery after weak data in September, when the effects of hurricanes in the southern US regions disturbed statistics. The data coming in November suggests that the strong posture of the labor market has been sustained. Employment rates in the Fed branch index of Philadelphia or ISM indices remain high. The ADP report published on Wednesday pointed to a solid increase of 190,000 jobs in the private sector. Hence the consensus for NFP is set high, at 195,000.

The sensitivity of the market to employment data remains low, as the healthy growth rate of jobs has been maintained for many months. Signs of a slowdown (ie: a reading closer to 150,000) will not be a big disappointment, as at this stage of the business cycle, there will be justified signs of inhibition caused by difficulties in finding a qualified workforce. Higher values (above 250,000) will be more important if the reduction in the unemployment rate translates into an effect. In October, the index fell to 4.1% from 4.2% in September. Descent to 4.0% would mean that the unemployment rate is already below FOMC forecasts for 2018-2019. The scenario of two or three increases in the Fed's interest rates in 2018 would be more likely. For USD it would be a positive impulse, so it is likely to appreciate further across the board.

The stronger-than-forecast wage growth will have a clear positive impact on USD regardless of the NFP indications and the unemployment rate, as it will provide arguments for the hawks in the Fed that wage pressure in the economy is intensifying and will soon be reflected in the acceleration of inflation. In this case, the data will be the foundation for building expectations of maintaining the Fed's hawkish bias at the next week's meeting with the prospect of three hikes in 2018.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The nearest technical support is seen at the level of 1.1713 as the price is moving down in a parallel channel. If the NFP Payrolls data will be better than expected, then the price might slide even lower towards the level of 1.1691 and even 1.1622. If the NFP Payrolls data will be worse than expected, the market might reverse and quickly cover the lost ground to hit the technical resistance at the level of 1.1807 and head even higher to 1.1941.