EUR/USD extends upside above 1.0900 as weaker NFP data drags US Dollar lower

FXStreet
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■  EUR/USD gains traction around 1.0915 in Monday’s early Asian session. 

■  The weaker-than-expected US Nonfarm Payrolls have undermined the US Dollar (USD). 

■  Stubborn inflation in the Eurozone raised doubts over market expectations for more ECB rate cuts in 2024. 


The EUR/USD pair extends the rally near 1.0915 during the early Asian session on Monday. The uptick of the major pair is bolstered by the softer Greenback after disappointing US employment data. Traders will keep an eye on the HCOB Purchasing Managers Index (PMI) from Germany and the Eurozone, along with the US ISM Services PMI, which is due later on Monday. 

Slowed-than-expected job growth and rising unemployment rate in the United States fuelled fears of a broader economic slowdown and weighed on the US Dollar (USD) broadly. Nonfarm Payrolls (NFP) increased by 114,000 for the month in July, down from the downwardly revised 179,000 in June and below the estimate of 185,000, the Labor Department reported on Friday. Additionally, the Unemployment Rate edged higher to 4.3%, its highest since October 2021.

Despite some fear of recession in the US, Federal Reserve (Fed) Chair Jerome Powell noted last week that the central bank's confidence about the “solid” economy and easing inflation data is raising confidence that the Fed could cut rates soon. Financial markets have fully priced in a rate cut of at least 25 basis points (bps) at each of the three remaining Fed meetings this year, according to the CME FedWatch Tool. 

Across the pond, the elevated inflation and steady growth in the Eurozone economy pushed back market expectations for more interest rate cuts this year. The headline HICP rose to 2.6% YoY in July, above the economists consensus of 2.4%. The core HICP, which excludes volatile items such as food, energy, alcohol, and tobacco, grew steadily at 2.9% against expectations of 2.8%.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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