The euro and the pound sterling weakened against the dollar after the US employment report for October. Nonfarm payrolls rose by 165,000 versus a forecast of 65,000 and a prior reading of 60,000, which was revised up from 29,000. A year ago, in October 2025, the figure was minus 140,000. The private sector added 159,000 jobs versus a forecast of 64,000 and 78,000 in September, and the three?month average rose to 137,000 from 79,000 a month earlier.
Unemployment ticked down to 4.1% against a forecast and prior of 4.2%; the number of unemployed fell to 7.07 million, while the labor force participation rate rose to 61.9% from 61.8%. The labor market has remained in a narrow 4.1–4.3% band since March, and there is no sign of a reversal in these figures. Wages increased 0.4% month-on-month versus the expected 0.3%, and annual wage growth accelerated to 3.1% against a 2.9% forecast. Average hourly earnings reached $38, and the workweek stayed at 34.4 hours.
The report's composition was also strong. Professional and business services added 70,000 jobs against a year-to-date average of 15,000, healthcare added 42,000, transportation and warehousing 25,000, and manufacturing 19,000. Additionally, August was revised up from 133,000 to 186,000 and September from 29,000 to 60,000, which together added another 84,000 jobs. For this reason, the report reads as confirmation rather than a one-off spike.
For the Federal Reserve, that data set reduces the case for a pause. The funds rate is currently 3.75–4.00%, and the market had already priced in a hike in December and another in March. As recently as November 5, Beth Hammack said she expects policy to move to a restrictive stance. "I expect monetary policy will need to move to a restrictive stance to get inflation back to 2% on time," said Beth Hammack, president of the Cleveland Fed. On October 28, she voted for a hike alongside Lisa Cook, while Kevin Warsh declined to signal on December; the data now align more with her view than with his caution.
The euro was hit harder by this combination because European data are moving in the opposite direction. Eurozone retail sales fell 0.7% in September versus a forecast of -0.1% and a prior +0.1%, and annual growth slowed to 0.4% from 0.8%. The ECB's deposit rate remains at 2.50%—1.25–1.50 percentage points below the Fed—and the base case still assumes a final hike in December to 2.75%. The pound also lost ground despite a hawkish signal from London. The Bank of England raised rates to 4.00% on November 5 in a 9–0–0 vote, while the market had expected 7–0–2; in September the vote was 3–0–6. After the decision, Andrew Bailey said a second hike would be more likely than not if energy prices returned to pre-oil-drop levels, and the market now sees December as a 50/50 outcome.
The current chain of causation is: high oil keeps inflation elevated, a strong US labor market and rising wages give the Fed reason to tighten further, dollar-denominated yields remain attractive, and currencies with weaker data give way. I believe that as long as US labor market metrics continue to outpace forecasts and European data diverge from ECB expectations, the euro lacks grounds for a sustained rebound. The pound's situation is slightly better due to the Bank of England's hawkishness, but without further signals from Bailey and a notable dollar pullback, I would not rule out continued downward pressure on GBP/USD, with EUR/USD likely remaining the weaker of the two in the coming sessions.
Technical outlook for EUR/USD
Buyers need to take 1.1175. Only then can the currency pair target a test of 1.1210. From there, it can reach 1.1245, but doing so without support from major players will be difficult. On the downside, I expect significant buying interest only around 1.1140. If there is no demand there, it would be reasonable to wait for a refresh of the 1.1110 low or to open longs from 1.1080.
Technical outlook for GBP/USD
Pound buyers need to clear near resistance at 1.3380. That would allow a target of 1.3410, above which it will be rather difficult to push. The farther target is the 1.3435 area. On a drop, bears will try to take control of 1.3345. If they succeed, a break of that range would deal a serious blow to long positions and push GBP/USD down to a low of 1.3320 with the prospect of moving to 1.3300.