EUR/USD declines on hot US NFP report, dents ECB-driven Euro rally
- Euro failed to capitalize on upbeat GDP and retail sales; ECB rate cut seen as nearing its limit.
- The US economy added 139K jobs in May, the second-highest in 2025, with the jobless rate steady at 4.2%.
- Hot labor data boosted US Dollar and Treasury yields, dampening Fed rate cut hopes.
EUR/USD trip down extends its losses on Friday after hitting a six-week high near 1.1500 as Nonfarm Payroll figures in the United States (US) came in stronger than expected despite cooling off. The print prompted investors to price in a less dovish Federal Reserve (Fed), while the Euro (EUR) failed to gain traction on upbeat economic data, revealed earlier. The pair trades at 1.1386, down 0.51%.
US jobs data, as revealed by the Bureau of Labor Statistics (BLS), depicted the robustness of the labor market and the economy, with the print being the second highest in 2025, trailing the 147K registered in April. Consequently, the Unemployment Rate remained unchanged.
As expected, the US Dollar advanced, propelled by the jump in US Treasury bond yields and an optimistic mood among investors, who bought US equities amid the conflict between US President Donald Trump and Elon Musk.
The EUR/USD failed to gain traction despite Gross Domestic Product (GDP) figures rising above estimates and surpassing the previous quarter's print. For a whole year, GDP improved from 1.2% to 1.5%, while Retail Sales also advanced in April.
During the week, the European Central Bank (ECB) decided to cut rates to 2% as inflation fell below the central bank’s target but signaled that it would pause its easing cycle. Robert Holzmann voted for keeping rates unchanged, and ECB President Lagarde hinted that the easing cycle is nearing its end.
Next week, the Eurozone (EU) economic docket will feature the ECB Survey of Monetary Analysis and Industrial Production. In the US schedule will feature US inflation figures on the consumer and the producer side, alongside with the University of Michigan (UoM) Consumer Sentiment preliminary release.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -0.47% | 0.70% | -0.32% | -0.93% | -0.94% | -0.12% | |
| EUR | 0.42% | -0.06% | 1.12% | 0.09% | -0.51% | -0.56% | 0.29% | |
| GBP | 0.47% | 0.06% | 1.20% | 0.15% | -0.45% | -0.50% | 0.35% | |
| JPY | -0.70% | -1.12% | -1.20% | -1.01% | -1.61% | -1.65% | -0.90% | |
| CAD | 0.32% | -0.09% | -0.15% | 1.01% | -0.61% | -0.65% | 0.19% | |
| AUD | 0.93% | 0.51% | 0.45% | 1.61% | 0.61% | 0.02% | 0.92% | |
| NZD | 0.94% | 0.56% | 0.50% | 1.65% | 0.65% | -0.02% | 0.85% | |
| CHF | 0.12% | -0.29% | -0.35% | 0.90% | -0.19% | -0.92% | -0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: EUR/USD downtrend stalls on strong US data
- EUR/USD uptrend remains intact, but it would be premature to assume it will remain so, given the uncertainty on US and Eurozone economic data releases.
- US Nonfarm Payrolls rose by 139K in May, beating expectations of 130K but falling short of April’s downwardly revised 147K. While signs of a cooling labor market are evident, overall conditions remain strong even as the economy slows.
- The Unemployment Rate held steady at 4.2%, prompting a repricing of rate expectations, with markets now anticipating fewer than two Fed cuts by the end of 2025.
- ECB officials reportedly expect rate cuts to be paused at the July meeting, according to Bloomberg. “Some officials see reductions in borrowing costs as maybe already finished, while others still back another move — probably in September, according to the people.”
- Financial market players do not expect that the ECB would reduce its Deposit Facility Rate by 25 basis points (bps) at the July monetary policy meeting.
Euro technical outlook: EUR/USD dives beneath 1.1400
EUR/USD is upwardly biased despite retreating to two-day lows of 1.1371, as buyers failed to break the 1.1500 mark, which could have exacerbated a move to 1.1600. Momentum fades as the Relative Strength Index (RSI) remains bullish but aims toward its neutral line. However, as long as the Euro remains near the 1.1380-1.1400 range, buyers are in charge.
The next resistance would be 1.1500. A breach of the latter would expose April’s peak at 1.1572, followed by 1.1600.
Conversely, if EUR/USD falls below the June 2 daily low of 1.1344, a move to 1.1300 is on the cards. A breach of the latter would expose the 20-day Simple Moving Average (SMA) at 1.1284, followed by the 50-day SMA at 1.1218 and 1.1200.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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