EUR/USD Pressured as US NFP Hits 130K and Unemployment Drops to 4.3%
The EUR/USD pair reversed sharply on Wednesday after strong US jobs data surprised the market. Earlier, the pair had...
Quick overview
- The EUR/USD pair reversed sharply after strong US jobs data, with the dollar rebounding and the euro retreating.
- January's Non-Farm Employment Change showed 130,000 new jobs, nearly doubling the forecast, while the unemployment rate fell to 4.3%.
- Wage growth of 0.4% indicates ongoing inflation challenges, leading markets to reconsider the likelihood of a Federal Reserve rate cut in March.
- Technical analysis suggests immediate support for EUR/USD at 1.1836, with potential bullish and bearish scenarios depending on price movements.
The EUR/USD pair reversed sharply on Wednesday after strong US jobs data surprised the market. Earlier, the pair had risen to an intraday high of 1.1926 on weak US retail numbers, but the strong employment report boosted the US dollar.
NFP Data: A Hawkish Surprise for the Fed
The US Department of Labor’s January 2026 report, delayed by a short government shutdown, showed the economy is stronger than many economists expected.
| Key Indicator | Actual | Forecast | Previous |
| Non-Farm Employment Change | 130K | 66K – 70K | 50K (Revised) |
| Unemployment Rate | 4.3% | 4.4% | 4.4% |
| Average Hourly Earnings (m/m) | 0.4% | 0.3% | 0.1% |
Why this matters:
- Job Growth: The 130,000 new jobs nearly doubled the forecast of 70,000.
- Unemployment: The rate fell to 4.3%, showing a tighter job market and making it less likely the Federal Reserve will cut rates aggressively in March.
- Wage Inflation: Wages rose 0.4% for the month, above the 0.3% estimate, which means inflation is still a challenge for policymakers.
Market Reaction: Dollar Rebounds, Euro Retreats
Before the jobs report, the Euro traded near 1.1910 because US retail sales were flat at $735 billion in December. But the strong jobs data caused the US Dollar Index (DXY) to bounce as traders covered short positions.
Now, markets are rethinking the chances of a rate cut in March. Weak retail sales had made a cut seem likely, but today’s jobs data suggests the Fed may keep rates higher for longer to control inflation.
EUR/USD Technical Analysis: Pullback to 1.1860
On the 4-hour chart, EUR/USD trades near 1.1864 after failing to break through the 1.1940 to 1.1965 resistance area.
- Immediate Support: The pair is testing short-term support at 1.1836, helped by the 50-period moving average at 1.1827.
- The Bullish Defense: If the price stays above 1.1780, which is the 100-period moving average, the overall upward trend from mid-January is still in place.
- Resistance Targets: If the price moves above 1.1946, it could head toward the key 1.2000 level and the recent high of 1.2044.
- Bearish Risk: If the price closes below 1.1767, it would show the jobs data has changed the trend and could lead to a test of the 1.1728 support.
Trade Idea: Given the current volatility, it may be wise to wait for the price to retest the 1.1830 to 1.1800 support area. If buyers hold this level, going long with a target of 1.1995 and a stop below 1.1765 could offer a good risk-to-reward setup.
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