The euro held firm against both the Canadian dollar and the US dollar on Friday, supported by better-than-expected German industrial production data while market attention turned squarely to the US Nonfarm Payrolls report.
German Data Offers Mixed Signals
Germany’s industrial output rose by 0.5% in the latest month, surpassing the consensus forecast of 0.1% and signaling resilience in the manufacturing sector despite persistent headwinds. Destatis, the federal statistics office, released the figures alongside trade data that showed a sharper-than-expected drop in exports, underscoring weak external demand. The mixed picture left the euro without a sustained catalyst but provided enough optimism to keep it elevated against the loonie, where the pair traded higher after the release.
EUR/CAD Supported by Oil Weakness
The euro’s advance against the Canadian dollar was amplified by soft oil prices, which weighed on the commodity-linked loonie. Technical analysts noted that EUR/CAD was approaching key resistance levels, with a break above possibly opening the door to further gains. However, traders remained cautious ahead of upcoming central bank meetings.
Nonfarm Payrolls as the Decisive Factor
Across the Atlantic, the US labor market takes the spotlight. Economists expect Nonfarm Payrolls to show a gain of around 180,000 jobs, with the unemployment rate holding at 4.0%. A strong print would reinforce the Federal Reserve’s higher-for-longer stance, likely strengthening the dollar and pressuring the euro. Conversely, a miss could revive bets on an early Fed rate cut, providing a boost to EUR/USD. The pair has been rangebound around 1.08, and today’s data is seen as a potential breakout catalyst.
Market pricing currently implies a 70% probability of an ECB rate cut at the next meeting, yet the lack of a clear trend in German data leaves policy expectations finely balanced. For traders, the NFP release will be critical not only for the dollar but also for setting the near-term direction of the euro.
