EUR/USD Stalls Below 1.1800 as NFP Data Strengthens September Rate Cut Bets
The EUR/USD pair hovered just below the 1.1800 level during Thursday’s European session, struggling to maintain this week’s bullish...
Quick overview
- The EUR/USD pair is struggling to maintain bullish momentum, hovering just below the 1.1800 level ahead of the U.S. Nonfarm Payrolls report.
- The NFP report showed stronger job growth but softer wage growth and a rising unemployment rate, reinforcing expectations for a potential Fed rate cut in September.
- Political pressure on the Fed, particularly from President Trump, is contributing to a weakened outlook for the dollar as a reserve currency.
- Despite mixed economic data from the U.S., EUR/USD remains range-bound but may trend upward if speculation about a Fed rate cut intensifies.
The EUR/USD pair hovered just below the 1.1800 level during Thursday’s European session, struggling to maintain this week’s bullish momentum. Traders largely paused ahead of the U.S. Nonfarm Payrolls (NFP) report—and now, with the data out, markets are recalibrating expectations for the Federal Reserve’s next move.
Stronger NFP Print, Softer Wage Growth Keep Fed Cut in Play
The headline NFP number came in at 147K, above the 111K expected, helping ease fears sparked by Wednesday’s dismal ADP print. However, average hourly earnings rose only 0.2% (vs. 0.3% forecast), and the unemployment rate climbed to 4.1%, the highest since late 2021.
This mixed bag reinforces expectations that the Fed could still cut rates in September, even if July remains unlikely. According to the CME FedWatch Tool, markets now price in a 96% probability of a cut in September, unchanged after the release.
Trump-Powell Rift Continues to Undermine Dollar Confidence
Political pressure on the Fed is compounding dollar headwinds. President Trump’s renewed call for Fed Chair Jerome Powell to resign is raising concerns about the central bank’s independence. While this hasn’t triggered a sharp EUR/USD breakout, it contributes to a weakened long-term outlook for the dollar as a reserve currency.
Eurozone Data Plays Second Fiddle to U.S. Macro
On the European side, June services PMI ticked up to 50.5, confirming a return to mild expansion. But reaction was muted, as the focus remains squarely on U.S. data and Fed rate policy.
Meanwhile, U.S. data released Thursday paints a mixed picture of economic momentum:
- Unemployment Claims dropped to 233K (better than expected)
- ISM Services PMI rose to 50.8, signaling a slight rebound
- Factory Orders surged 8.2%, offering a surprise boost to industrial activity
EUR/USD Technical Outlook
On the 2-hour chart, EUR/USD continues to trade above ascending trendline support near 1.1717, with the 50-period EMA at 1.1760 acting as dynamic resistance.
Immediate resistance: 1.1808 → 1.1846
Support: 1.1717 → 1.1672 → 1.1631
A breakout above 1.1808 could trigger a move toward 1.1846 and beyond, especially if U.S. rate cut speculation deepens. On the downside, a break below 1.1717 would shift bias toward 1.1672.
Conclusion:
EUR/USD is holding steady despite stronger NFP numbers, as wage softness and rising unemployment balance out headline strength. With political risks lingering and data momentum mixed, the pair may remain range-bound in the short term, but still biased toward upside if Fed cut expectations grow.
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