**EUR/USD Surges as US Job Data Fuels Expectations of Fed Interest Rate Cuts**
**Original Reporting by Matias Salord, FXStreet**
The euro (EUR) made substantial gains against the US dollar (USD) after the release of pivotal Nonfarm Payrolls (NFP) data from the United States. The employment report did not meet market expectations, triggering a wave of speculation that the Federal Reserve could soon begin to lower interest rates. This article explores the details behind the US jobs data, the market’s subsequent reaction, and what this could mean for the EUR/USD currency pair in the coming months. Additional insights are included from market analysts at Reuters and Bloomberg to provide a comprehensive overview.
—
**US Nonfarm Payrolls Disappoint Expectations**
The US Department of Labor published its Nonfarm Payrolls report for July, a closely watched economic indicator used to gauge the health of the American labor market. The report was weaker than many analysts anticipated, a detail that had immediate repercussions for the financial markets.
– **Job Growth:** US employers added just 187,000 jobs in July, compared to the consensus expectation of around 200,000.
– **Previous Months Revised:** The reports for May and June were revised downward by a total of 49,000 jobs, intensifying concerns that the jobs market growth is cooling off.
– **Unemployment Rate:** Despite weaker job creation, the unemployment rate dropped slightly to 3.5 percent, indicating there are fewer people actively looking for work or more people leaving the workforce.
– **Wage Growth:** Average hourly earnings rose 0.4 percent over the preceding month and 4.4 percent year-over-year, both slightly above consensus estimates.
This mixed report made the situation more complex. The lower-than-expected headline figure focused attention on the slowing pace of job creation, a factor that frequently sways Federal Reserve policy decisions.
—
**Market Reaction: EUR/USD Rockets Higher**
The immediate response in the financial markets was pronounced. The EUR/USD currency pair rallied dramatically, rising to the 1.1900 level within minutes of the NFP release before seeing a slight retreat. The underlying driver was the assumption that the Federal Reserve may be forced to alter its monetary policy outlook as economic conditions soften.
**Key Market Movements:**
– EUR/USD surged by over 150 pips within the day, piercing key resistance levels.
– US Treasury yields dropped sharply, as bond traders bet on an imminent end to the current cycle of rate hikes and possible cuts ahead.
– The US dollar index (DXY), which tracks the greenback against a basket of major peers, saw a swift decline, underscoring broad-based USD weakness.
According to Matias Salord at FXStreet, the euro’s impressive intraday jump represents a significant break from the consolidation pattern observed in previous sessions. The move is viewed by many as a technical signal that further gains could follow for the EUR/USD, particularly if incoming US economic data remain weak.
Read more on AUD/USD trading.