**U.S. Dollar Slides as Job Growth Slows Sharply: In-Depth Outlook on EUR/USD, GBP/USD, USD/CAD, USD/JPY**
*Based on the original article by James Hyerczyk for FX Empire*
The U.S. dollar dropped significantly in the foreign exchange markets following an unexpected decline in the country’s non-farm payrolls report. The U.S. economy added just 22,000 jobs in the most recent month, far below the consensus forecast. This weak figure sent shockwaves across forex markets and reshaped expectations around Federal Reserve policy, sparking declines in the U.S. dollar across major currency pairs.
The report not only cast fresh doubts on the sustainability of the U.S. labor market recovery but also prompted investors to retreat from safe-haven dollar positions in favor of other major currencies. Below is an in-depth analysis of the implications of the soft labor report and what it means for key currency pairs: EUR/USD, GBP/USD, USD/CAD, and USD/JPY.
## Overview of the U.S. Non-Farm Payroll Report and Initial Market Reaction
The Labor Department’s latest non-farm payrolls report showed that the U.S. economy added just 22,000 jobs in the past month. This figure shocked both economists and traders who had anticipated job gains in the neighborhood of 200,000. Adding to the disappointment:
– The unemployment rate remained unchanged at 3.9 percent.
– Average hourly earnings rose by a modest 0.2 percent versus expectations of a 0.3 percent increase.
– Labor force participation was slightly lower, suggesting a reduced number of people actively seeking work.
These figures suggest that the labor market could be cooling off more rapidly than previously anticipated, leading to speculation that the Federal Reserve could delay any plans for further rate hikes or consider rate cuts sooner.
## Broader Economic Outlook Weighs on the Dollar
The highly disappointing payroll numbers were taken as a signal that economic momentum in the U.S. may be faltering. As a result:
– Investors started reducing their expectations for further monetary tightening by the Fed.
– Market pricing now signals greater likelihood of a Fed rate cut before the end of 2024.
– Bond yields fell noticeably, with the 10-year U.S. Treasury yield dropping more than 10 basis points on the day.
– Lower yields weakened the U.S. dollar, prompting broad-based selling pressure across major and minor currency crosses.
Given that the Federal Reserve has repeatedly emphasized labor market strength as a critical factor in its monetary policy decisions, this jobs report could shift the central bank’s forward guidance.
## Impact on Major Currencies
### EUR/USD: Euro Surges as Dollar Stumbles
The euro saw a notable rise in value against the U.S. dollar after the payrolls release, with EUR/USD advancing firmly above the 1.0800 level and briefly touching 1.0900 in intraday trading.
Key drivers behind the move include:
– A weaker dollar across the board.
– Stronger-than-expected services PMIs in the Eurozone, supporting the outlook for growth in the region.
– Stabilization in German industrial orders, which reinforced the euro’s appeal.
From a technical perspective:
– The pair broke out above both the 50-day and 100-day moving averages.
– Bullish momentum indicators are turning higher, indicating potential for further gains.
– Resistance now lies near the 1.0950 area, while support is seen at 1.0820.
If U.S. data continues to disappoint, EUR/USD could test the psychologically important 1.1000 level in the near term.
### GBP/USD: Pound Soars on Risk Appetite and Dollar Weakness
The British pound also moved higher against the greenback, with GBP/USD trading near multi-week highs above 1.2750.
Several factors supported the move:
– Renewed risk appetite in global markets benefited the pound.
– Stabilization in U.K.
Read more on EUR/USD trading.