EURUSD remains over 1.0800 as US labor market strength weakens.

In Tuesday’s European session, EURUSD maintained gains above the critical support level of 1.0800. The major currency pair is up as the US Dollar (USD) is under pressure due to widespread market anticipation that the Federal Reserve (Fed) would begin cutting interest rates in September. According to the CME FedWatch tool, traders expect interest rates to be lower than current levels at the September meeting, up from 65.6% the previous week.

The weakening labor market in the United States has sparked anticipation. That the Fed will return to policy normalization in September. The unemployment rate soared to its highest level in more than two years. While average hourly earnings fell as forecast in June, indicating that labor market conditions are easing.

Powell may avoid from announcing a particular timeframe for rate decreases.

Investors are looking for new interest rate indications from Fed Chair Jerome Powell’s semi-annual Congressional hearing, which is set for 14:00 GMT. Powell is anticipated to reaffirm. That interest rates should remain at present levels until inflationary pressures have declined for many months.

Powell stated at the European Central Bank’s (ECB) Forum of Central Banking. That the central bank has made quite a deal of work on inflation, and recent data suggests The disinflationary process has resumed.

Investors are looking for additional clarity on disinflation in the US Consumer Price Index (CPI) report for June. Which will be released on Thursday. The core CPI data, which excludes volatile food and energy costs, is projected to have consistently increased. Although headline statistics are expected to have declined.

Daily Market movers: EURUSD stabilizes at 1.0800 as ECB’s Knot drives hopes for additional rate cuts.

EURUSD trades flat above 1.0800 after reaching a new three-week high near 1.0850 on Monday. The major currency pair increases as the Euro’s outlook brightens following French election polls indicating that the far-right National Rally led by Marine Le Pen fell short of an absolute majority. This has lessened the likelihood that France’s debt problem would worsen.

However, political uncertainty. is maintained as no party achieves an outright majority. This leads to the formation of a coalition government, which causes major delays in fiscal decisions due to differing viewpoints. Investors believe that Jean-Luc Mélenchon’s left-wing coalition, which surprisingly won more seats than the rest, will form a new government with President Emmanuel Macron’s centrist alliance.

The ECB’s Knot does not expect the central bank to drop interest rates again in July.

EURUSD maintained gains above the critical support level of 1.0800. Meanwhile, diminishing expectations that the ECB may slash interest rates further at its July meeting has aided the Euro’s decline. Officials expect price pressures to remain stable this year, but an aggressive policy easing attitude could change that.

On Monday, ECB policymaker and Dutch central bank director Klaas Knot pushed back expectations for rate reduction in July. Knot stated in an interview with Handelsblatt: “I don’t see a case for another rate cut in July.” However, he is confident that more rate reduction will be announced this year, and he is looking forward to the September meeting.