Title: EUR/USD Surges to 1.1714 as Weaker-than-Expected U.S. Jobs Data Undermines Dollar Strength
Source: Adapted from FXStreet article by FXStreet News Team
Original URL: https://www.fxstreet.com/news/eur-usd-jumps-to-11714-as-weak-us-jobs-data-sinks-dollar-202509052105
The EUR/USD currency pair climbed sharply on Thursday, reaching a key resistance level at 1.1714, after disappointing U.S. jobs data caused the U.S. Dollar to weaken across the board. The release of underwhelming non-farm payroll numbers triggered a downward spiral for the greenback, reversing investor sentiment and fueling demand for the euro. This turn of events has renewed speculation that the Federal Reserve may delay any plans to tighten monetary policy.
Here is an in-depth analysis and breakdown of the market movement, economic data, and technical outlook following the jobs report.
Overview of EUR/USD Movement
– The EUR/USD pair rose to a session high of 1.1714 after the U.S. jobs data was published.
– The U.S. Dollar Index (DXY), a measure of the dollar’s strength against a basket of major currencies, dropped noticeably as traders recalibrated their expectations for future interest rate hikes.
– Prior to the report, the pair had been trading with a slightly bearish tone due to persistent uncertainty surrounding the macroeconomic outlook in both the Eurozone and the United States.
Key Economic Data: U.S. Non-Farm Payrolls Report Disappoints
– According to the U.S. Bureau of Labor Statistics, August’s non-farm payrolls increased by only 235,000 jobs, significantly underperforming the expected 750,000 jobs forecast by economists.
– The unemployment rate, however, fell slightly to 5.2 percent from 5.4 percent in July.
– Average hourly earnings increased by 0.6 percent for the month, compared to the 0.3 percent consensus.
Impacts of the Data on Market Sentiment
– The massive shortfall in job creation sparked immediate concerns that the spread of the Delta variant of COVID-19 is throttling the U.S. economy’s recovery.
– Market participants reacted swiftly by reducing bets that the U.S. Federal Reserve would soon begin tapering its asset purchase program.
– As the odds of imminent policy tightening faded, risk-free Treasury yields dipped, further fuelling dollar weakness.
– The lower yields made U.S. assets less attractive compared to European counterparts, pushing capital flows toward the euro.
Federal Reserve’s Stance Under Scrutiny
– Before the jobs report, Fed officials had indicated they might start tapering bond purchases this year if job growth continued at a steady pace.
– The August payrolls data effectively throws a wrench into that narrative, encouraging expectations that the central bank will delay its decision until more robust labor market gains are evident.
– Fed Chair Jerome Powell had previously emphasized in his Jackson Hole remarks that any decision to taper would depend heavily on labor data going forward.
Market Reaction and Analyst Insights
– Analysts across the board highlighted how the softness in employment figures adds to the market’s perception that the Fed will remain accommodative for longer.
– The U.S. Dollar’s decline was widespread, with not only the euro but other major currencies like the British Pound and Japanese Yen recording gains.
– Equity markets responded positively, driven by a “dovish Fed” interpretation, with the S&P 500 and Nasdaq Composite both reaching new record highs.
Specific EUR/USD Technical Levels Watched
– Resistance Levels:
– 1.1714 (recent swing high marked after the jobs report)
– 1.1740 (50-day moving average)
– 1.1800 (psychological level and former support)
– Support Levels:
– 1.1660 (intraday support)
– 1.1620 (previous week’s
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