**Euro Declines Against the US Dollar for Seventh Straight Session After Mixed US Job Data**
*Original article by VT Markets. This version expands and restructures the content for clarity and depth.*
The euro (EUR) continued its downtrend against the US dollar (USD) on Friday, marking the seventh consecutive session of losses. This persistent depreciation came in the wake of mixed US employment data, which offered investors limited clarity on the future trajectory of the Federal Reserve’s monetary policy. As investors assess shifting economic indicators and central bank guidance, currency markets remain volatile, with the EUR/USD pair at the center of attention.
Below is a detailed breakdown of the recent price action, data releases, and broader macroeconomic context affecting the EUR/USD pair and investor sentiment heading into this week’s announcements.
## Mixed US Employment Data Sparks Dollar Strength
The most recent US labor market data presented a more complex picture for investors evaluating the strength of the American economy. The duality of weak job creation alongside rising wages provided conflicting signals on labor market health and inflationary pressures.
### Key data points from the US employment report:
– **Non-Farm Payrolls (NFP):** The US economy added 175,000 jobs in April, significantly below the expected 243,000 jobs. This slowdown suggested that the labor market may be beginning to decelerate after months of robust performance.
– **Unemployment Rate:** The jobless rate ticked up to 3.9 percent from 3.8 percent in the prior month. Though still historically low, the increase hints at subtle softening in hiring dynamics.
– **Average Hourly Earnings:** Wages rose 0.2 percent on a monthly basis, just under the 0.3 percent forecast and the prior month’s print. On a year-over-year basis, average wages increased by 3.9 percent, slightly below the 4.0 percent consensus.
These figures point to a labor market that is cooling, which in theory should reduce inflationary pressures and allow the Federal Reserve some policy flexibility. However, other data released earlier in the week—including stronger-than-expected readings on ISM Manufacturing and job openings—suggested that pockets of strength remain in the economy.
Despite the softer-than-expected employment report, the US dollar rose against a basket of other major currencies. The US Dollar Index (DXY), which tracks the greenback’s performance against six major currencies, climbed back above 105. This uptick in the dollar limited the potential upside in EUR/USD, reinforcing its downward trend.
## Federal Reserve Holds Rates, Offers Hawkish Tone
The Federal Open Market Committee (FOMC) maintained interest rates at a range of 5.25 percent to 5.50 percent during its most recent policy meeting, as expected. However, it was Chair Jerome Powell’s accompanying remarks that grabbed investors’ attention.
### Key takeaways from Fed Chair Powell’s comments:
– **Rate Cuts Unlikely in Near Term:** Powell indicated that the current inflation trend does not yet support rate cuts. He stressed that the committee wants to see “greater confidence” that inflation is sustainably moving toward the Fed’s 2 percent target before considering any loosening of monetary policy.
– **Balance Sheet Adjustment:** The Fed announced plans to slow the pace of its balance sheet reduction from June 1 onward. The monthly cap on Treasury runoff will be lowered from $60 billion to $25 billion per month. The cap on mortgage-backed securities (MBS) will remain at $35 billion.
– **Inflation Still Stubborn:** While Powell acknowledged some signs of inflation easing, he emphasized that inflation remains elevated and persistent in certain segments of the economy.
These statements were interpreted as moderately hawkish, giving the dollar an added lift and pushing EUR/USD lower.
## Euro Faces Regional Headwinds
While the dollar has found support from firm US economic indicators and hawkish Fed commentary, the euro’s fundamental backdrop has turned increasingly fragile. With the European Central Bank (ECB)
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