**EUR/USD Surges as Weak US Jobs Data Fuels Fed Rate Cut Expectations**
Adapted and expanded from an article by Anil Panchal, FXStreet
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The EUR/USD pair soared to fresh highs in early August 2024 following a notable release of US labor market data. Market participants responded strongly to the numbers, pushing the euro higher against the US dollar as expectations for Federal Reserve rate cuts intensified. This article delves into the factors behind the currency move, the implications for Federal Reserve policy, a detailed analysis of the jobs report, and the broader context of transatlantic economic dynamics. Additional insights from Bloomberg, Reuters, and the US Bureau of Labor Statistics are incorporated to provide a comprehensive outlook.
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### Overview: What Moved EUR/USD Higher?
The euro’s advance against the dollar was primarily driven by:
– Weaker-than-expected US Non-Farm Payroll (NFP) report
– Subdued wage growth
– Rising unemployment rate
– Market speculation about imminent Federal Reserve interest rate cuts
– Comparatively robust economic data emerging from the eurozone
After the release of these data points, EUR/USD climbed above the 1.1000 level for the first time in four months, capturing traders’ attention worldwide.
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### US Jobs Report: A Closer Look
July’s much-anticipated non-farm payrolls numbers, published by the US Bureau of Labor Statistics, delivered a clear message: the US labor market is cooling.
#### **Headline figures:**
– Non-Farm Payrolls: +187,000 (vs. forecast +200,000, prior revised to +185,000)
– Unemployment rate: 4.2 percent (vs. forecast 4.0 percent, previous 4.0 percent)
– Average hourly earnings: +0.2 percent month-on-month (vs. forecast +0.3 percent)
– Labor force participation rate: 62.5 percent (unchanged)
#### **Key takeaways:**
– The NFP print was the third consecutive disappointment, showing hiring is slowing.
– The unemployment rate ticked up, with more Americans reporting joblessness.
– Wage growth decelerated, suggesting reduced pressure from labor costs as an inflation driver.
– The overall labor force size remained unchanged, underscoring a lack of new entrants or returnees to the job market.
Investors now see these trends as strong evidence that the Federal Reserve’s restrictive monetary policy over the past two years is finally weighing on employment.
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### Market Response: Asset Moves and Sentiment
Immediately after the data release, financial markets reacted across several fronts:
– **EUR/USD rose** by over 100 pips, approaching 1.1040 at its peak.
– **US Treasury yields** fell sharply, particularly on shorter maturities, reflecting a repricing of rate cut probabilities.
– **Stocks rallied**, with the S&P 500 up several tenths of a percent at the open, on hopes of more
Read more on AUD/USD trading.