EURUSD rises to around 1.0900 as the US Dollar falls following a dismal US NFP report for July.

During Friday’s North American trading hours, the EURUSD rose to near round-level resistance at 1.0900. The major currency pair rallied after the US Nonfarm Payrolls (NFP) report for July revealed substantial fractures in the labor market’s strong conditions. The study stated that US firms employed 114K new workers in July, lower below projections of 175K and the previous addition of 179K, which was revised downward from 206K.

US labor demand looks to have slowed dramatically, resulting in weaker pay increases.

The unemployment rate jumped substantially to 4.3%, exceeding projections and the previous release of 4.1%. Furthermore, slower Average Hourly Earnings growth, a crucial metric of wage growth that drives consumer spending and, ultimately, influences pricing pressures, has alleviated concerns that price pressures may persist. Annual wage growth slowed to 3.6%, down from 3.7% estimates and a previous reading of 3.8%, which was reduced from 3.9%.
Weak US labor demand has weighed severely on the US Dollar (USD), raising predictions that the Federal Reserve (Fed) will start lowering interest rates in September. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, falls to around 103.30. The outlook for the US dollar was already bleak due to A series of dismal US economic data
On Thursday, the US ISM Manufacturing Purchasing Managers Index (PMI) report for July revealed that manufacturing activity unexpectedly dropped at a quicker rate, to 46.8. Economists predicted a slower contraction in the Manufacturing PMI to 48.8, down from 48.5 in June. Also, initial jobless claims for the week ending July 26 were the highest in 11 months. Individuals collecting unemployment benefits for the first time totaled 249K, exceeding predictions of 236K and the previous release of 235K.

Daily Market movers: EURUSD rises as US dollar falls.

EURUSD rises to near the round-level mark of 1.0900 in Friday’s New York session. The common currency pair increases after gloomy US NFP data, which promotes rate cuts. expectations. Meanwhile, the Fed was already preparing to shift to policy normalization in September.
On Wednesday, the Fed maintained interest rates constant in the 5.25%-5.50% range but provided dovish advice, as expected. Jerome Powell, the chairman of the Federal Reserve, commented: “If we were to see inflation moving down more or less in line with expectations, growth remains reasonably strong, and the labor market remains consistent with current conditions, then I think a rate cut could be on the table at the September meeting” , per Reuters.

The Euro fails to benefit from growing market uncertainty about the ECB’s plans to lower interest rates twice more this year.

On the other side of the Atlantic, the Euro is struggling to recover despite a higher-than-expected Eurozone preliminary Harmonized Index of Consumer Prices (HICP) in July. The headline HICP surprisingly increased to 2.6%, when economists expecting inflation to slow to 2.4% higher than the 2.5% recorded in June. The core HICP, which excludes volatile goods such as food, energy, alcohol, and tobacco, rose gradually by 2.9%, beating predictions of 2.8%.
Furthermore, the old continent’s preliminary GDP growth in the second quarter was stronger than projected. The Eurozone economy grew gradually by 0.3%, whereas investors expected a lesser growth rate of 0.2%.
A forecast of persistent inflation and steady growth undermines market expectations for interest rate decreases. Financial markets presently expect the European Central Bank (ECB) to lower its benchmark borrowing rates twice more this year. A few ECB policymakers are content with market expectations, but others are hesitant to commit to a certain rate-cut path.