On Friday, the EUR/USD pair bounced back over 1.0900 as the US Dollar took a hit following disappointing US Nonfarm Payroll figures. The market fears of a slowdown in the US economy led to a risk-off sentiment, causing a decline in the Greenback across the board. With concerns about a potential recession in the US, investors are closely watching economic data and bets on a rate cut in the coming weeks.
The latest US NFP data for July showed the addition of 114K new jobs, falling short of the expected 175K. The previous month’s figures were also revised down, with the Unemployment Rate rising to 4.3%, the highest since November 2021. Average Hourly Earnings growth slowed to 0.2% month-over-month, below expectations, while year-over-year wages growth decreased to 3.6%.
Amidst negative US economic data, rate traders are pricing in a potential rate cut in September, with a 70% chance of a double-cut by the Federal Reserve on September 18. Next week, focus will be on the US ISM Manufacturing Purchasing Managers Index (PMI), expected to increase to 51.0, and the EU Retail Sales data for June, which is forecasted to slightly cool to 0.2%.
From a technical perspective, EUR/USD broke out of a descending channel on daily candlesticks, but still needs to overcome the 200-day Exponential Moving Average to make a move towards 1.0950. If buyers can maintain momentum, the pair could experience a technical rejection at 1.0802, while sellers might push bids lower towards 1.0700.
The Euro serves as the currency for 20 European Union countries in the Eurozone and is the second most traded currency in the world after the US Dollar. The European Central Bank (ECB) in Frankfurt, Germany, manages monetary policy and aims to maintain price stability. Key factors that influence the Euro include inflation data, economic indicators such as GDP and PMIs, as well as the Trade Balance of Eurozone countries. Positive economic data and a strong export balance can strengthen the Euro, while weak data could lead to a decline in the currency.
In conclusion, the EUR/USD pair experienced a rebound following disappointing US NFP data, with market concerns of a US slowdown driving a risk-off sentiment. Traders are monitoring economic data and rate cut bets, with expectations of a potential cut by the Federal Reserve in September. Next week’s focus will be on key data releases in the US and EU, which could impact the currency pair’s movement. The Euro is influenced by various factors, including inflation, economic indicators, and trade balances, which can impact its strength in the forex market.
