EUR/USD surges after weak NFP data

The EUR/USD pair has risen above 1.1007, positioning the Euro for a strong finish. The US Nonfarm Payrolls report showed an 187K increase in labor force participation and an unemployment rate of 3.6%, higher than 3.5%.

This resilience is a key factor holding inflation at or around 3%, making the task of the US Fed more challenging. However, salaries continued to rise, with the average hourly wage rising to 4.4% YoY from the expected 4.2%.

The market penalized the dollar after the data release, and US Treasury bond yields fell, resulting in the EUR/USD appreciation. German factory orders were strong in June, but they were offset by weak retail sales at -0.3% MoM, below expectations of 0.2%.


There is a 35% possibility that the ECB will increase interest rates by 25 basis points in September, but estimates for October and November are still high at 60% and 70%, indicating that the ECB would follow the Fed’s lead and miss meetings to discuss monetary policy.