The EURUSD pair remained nearly unchanged in Thursday’s European session, holding steady just beneath the 1.1800 level, a critical psychological resistance and multi-year high. Investors are staying cautious ahead of the highly anticipated US Nonfarm Payrolls (NFP) report, due to be release at 12:30 GMT. The EURUSD movement has been muted in recent sessions, underpinned by rising hopes of a Federal Reserve rate cut in the coming months, after a downbeat ADP employment report earlier this week.
ADP Report Fuels Fed Rate Cut Bets, Limits USD Upside.
The US Dollar saw a limited recovery after the ADP Employment Report showed a significant decline of 33,000 jobs in June, starkly missing the forecasted 95,000 increase. It marked the first private payroll contraction since the pandemic, intensifying speculation that the Federal Reserve may be corner into easing policy sooner rather than later.
According to CME Group’s FedWatch Tool, market participants now price in a 25% chance of a July rate cut, up from 20%, and a 96% chance of a 25-bps rate cut by September, up from 90%. The bearish outlook for the USD comes as investors digest a weakening US labor market and slowing economic momentum.
Trump’s Fed Attacks Resurface, Undermining USD Confidence
In a rare and controversial move, President Trump once again called for Fed Chair Jerome Powell’s resignation, intensifying the perceived threat to central bank independence. The President’s rhetoric casts a long shadow over the Fed’s credibility, with potential implications for the US Dollar’s reserve currency status.
This unprecedented political interference adds another layer of complexity to monetary policy expectations and is causing unease among international investors, already concerned about global trade uncertainties and the fragility of the US labor market.
Eurozone Data Offers Minimal Support to EURUSD
On the EURUSD side, the June Services PMI was revised up to 50.5 from 50.0, signaling a modest return to growth after May’s contraction. While this offers some reassurance about the resilience of the Eurozone economy, it failed to drive significant momentum in the Euro as the focus remains squarely on the US jobs report.
The market largely shrugged off the revision, acknowledging that growth remains fragile in Europe amid concerns about Germany’s economic slowdown and ongoing ECB dovishness.
US-Vietnam Trade Deal Lifts Market Mood, But USD Stays Fragile
On Wednesday, President Trump announced a new trade agreement with Vietnam, which boosted risk sentiment and raised hopes for further de-escalations ahead of the July 9 tariff deadline. However, the USD remained under pressure as other Asian economies voiced frustration over the complex and opaque US tariff negotiations.
While the risk-on sentiment stemming from this trade optimism provided temporary relief, it wasn’t enough to reverse the weakening USD trend, especially amid expectations of monetary policy easing.
Key Economic Data to Watch
As the market awaits the Nonfarm Payrolls figures, analysts anticipate:
NFP Change (June): Expected +110K (Previous: +139K)
Unemployment Rate: Forecast 4.3% (Previous: 4.2%)
Average Hourly Earnings (YoY): Expected +3.9%, unchanged
ISM Services PMI: Expected 50.5, rebounding from 49.9
If the NFP confirms a softening labor market, the Fed could be forced to act at the September FOMC meeting, or even as soon as July, reinforcing the bearish USD.
Technical Outlook: EURUSD Eyes 1.1800 Break
Technically, EURUSD continues to consolidate within a tight ascending channel, hovering just below the 1.1800 resistance zone. A break above 1.1815 could trigger a fresh leg higher toward 1.1870, while support lies at 1.1750 and 1.1710.
RSI on the daily chart remains in bullish territory
MACD continues to print positive histograms
Consolidation signals a breakout is imminent post-NFP
A soft NFP print could be the catalyst for a bullish breakout, especially if the market fully prices in a Fed pivot.
Conclusion: EURUSD in Standby Mode Before NFP Shockwave
The EURUSD pair is in wait-and-watch mode, consolidating near multi-year highs as traders await the June Nonfarm Payrolls report, the key risk event of the week. With ADP data pointing to labor market weakness and political interference rattling confidence in the Fed, the bias remains tilted toward a weaker USD.
A disappointing NFP print could all but confirm a rate cut in September, propelling the Euro above the 1.1800 mark. However, any upside surprise in payrolls or wages could throw cold water on rate cut hopes, triggering a USD rebound and EURUSD correction.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult a professional advisor before making investment decisions.
[sc_fs_multi_faq headline-0=”h2″ question-0=”Why is the EURUSD consolidating?” answer-0=”Investors are cautious ahead of the key US Nonfarm Payrolls data. The market is in a holding pattern, awaiting direction from labor market figures.” image-0=”” headline-1=”h2″ question-1=”What does a weak NFP mean for the EUR/USD?” answer-1=”A disappointing NFP would likely raise Fed rate cut expectations, weakening the USD and supporting a bullish EUR/USD breakout.” image-1=”” headline-2=”h2″ question-2=”How did the ADP data affect the market?” answer-2=”The ADP report showed the first job loss since the pandemic, intensifying concerns about the labor market and boosting rate cut bets.” image-2=”” count=”3″ html=”true” css_class=””]
