The euro gained ground against the US dollar on Friday, with EUR/USD climbing to 1.1714 after a disappointing US labor market report fueled expectations of a Federal Reserve rate cut in September. At the time of writing, the pair is up 0.50%.
US jobs miss sparks bond rally, dollar sell-off
The August Nonfarm Payrolls (NFP) report showed the US economy added just 22,000 jobs, well below the 75,000 consensus and down sharply from July’s revised 79,000. The unemployment rate ticked up to 4.3% from 4.2%, while average hourly earnings rose 0.3% month-on-month, in line with forecasts.
The data underscored signs of cooling in the US labor market, pushing Treasury yields lower. The 2-year note yield tumbled as futures markets fully priced in a September rate cut. Fed funds futures now imply a 100% probability of a 25-basis-point reduction and a 14% chance of a larger 50-basis-point move.
The US Dollar Index (DXY) fell 0.70% to 97.57 as investors shed the greenback. Meanwhile, US equities gave up early gains, closing in negative territory amid concerns about the broader economic outlook.
ٍٍEurozone data adds to bullish momentum
In Europe, second-quarter GDP was revised up to 1.5% year-on-year, above the initial 1.4% estimate, while quarterly growth remained steady at 0.1%. Germany’s DIW Berlin reported tentative signs of recovery, projecting 0.2% growth in 2025.
Markets see the European Central Bank holding rates steady, with a 91% probability of no change and only a 9% chance of a 25 bps cut, according to interest rate futures.
Technical outlook: buyers hold the upper hand
EUR/USD touched a five-week high of 1.1759 before easing slightly, but momentum remains in favor of buyers as signaled by the Relative Strength Index (RSI).
The next resistance level lies at 1.1759, followed by the psychological 1.1800 mark. A break above could open the door to test the year-to-date high at 1.1829. On the downside, a daily close below 1.1700 would expose support at 1.1650 and 1.1600, with the 100-day SMA at 1.1526 providing a deeper floor.
