**EUR/USD Surges as Weak U.S. Jobs Data Fuels Fed Rate Cut Expectations**
*Based on the original reporting by Cristian Mangino, FXStreet, with additional context and analysis from industry sources.*
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The EUR/USD currency pair experienced a notable surge as unexpectedly weak U.S. jobs data reinforced market expectations that the Federal Reserve would move toward rate cuts soon. The data release triggered an immediate reaction in financial markets, prompting a sharp fall in the U.S. dollar and a strong rally in the Euro. The following article explores the details behind this movement, examines market reactions, and discusses the potential implications for future Federal Reserve policy and global currency markets.
**Summary of the Key Event: U.S. Nonfarm Payrolls Miss Expectations**
On Friday, the United States Bureau of Labor Statistics reported that the U.S. economy added fewer jobs in July than economists had anticipated:
– **Nonfarm Payrolls**: Only 187,000 jobs were added versus the consensus forecast of 200,000.
– **Unemployment Rate**: Held steady at 3.5 percent, aligning with expectations.
– **Average Hourly Earnings**: Climbed 0.4 percent month-over-month, slightly above the projected 0.3 percent, indicating lingering wage inflation.
This employment report came in weaker than the market had expected, especially following months of robust jobs data. The jobs report is closely watched for signs of economic strength or weakness, as it tends to influence U.S. monetary policy.
**Impact on EUR/USD: Immediate Reaction and Extended Rally**
Following the jobs data release, the U.S. dollar depreciated sharply against all major counterparts, including the Euro. The EUR/USD pair quickly rose from intraday lows near 1.0920 to 1.1015—a jump of nearly 100 pips. This move was underpinned by the following factors:
– **Expectations for Fed Rate Cuts**: Weaker jobs data suggests that the Fed’s previous rate hikes are beginning to slow the U.S. economy, potentially prompting the central bank to cut interest rates sooner than expected.
– **Yield Differential**: As U.S. bond yields fell in reaction to softer data, the spread between U.S. and European yields narrowed, favoring the Euro.
– **Technical Breakout**: The EUR/USD broke key resistance levels, encouraging additional buying from momentum traders.
**Market Reaction: Broader Dollar Weakness**
– **USD Index**: The U.S. dollar index fell to its lowest level since early June, indicating widespread dollar selling beyond just the EUR/USD pair.
– **Other Major Pairs**:
– GBP/USD surged past the 1.2750 level.
– USD/JPY retreated sharply, with the Japanese yen benefiting from safe-haven flows.
– **Equity Markets**: U.S. stock indexes rose, as weaker jobs data is seen as reducing the threat of further rate hikes and possibly leading to easier financial conditions in
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