**EUR/USD Skyrockets as Weak US Jobs Data Fuels Fed Rate Cut Expectations**
*Based on reporting by Anil Panchal for FXStreet, with additional context from Reuters, Bloomberg, and the US Bureau of Labor Statistics.*
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The EUR/USD currency pair experienced a sharp surge on Thursday after the release of surprisingly weak US Nonfarm Payrolls (NFP) data heightened expectations for the Federal Reserve to begin cutting interest rates sooner than previously anticipated. The significant move in the euro versus the dollar follows a period of investor anxiety regarding the resilience of the US labor market and the future direction of Federal Reserve monetary policy.
## Overview: Disappointing US Jobs Data and Its Market Impact
Thursday’s US jobs report, released by the Bureau of Labor Statistics, showed the creation of 150,000 jobs in July, far below broad market forecasts of 200,000. The unemployment rate ticked up to 4.2 percent from 4.0 percent in June, reaching the highest level since November 2021. The participation rate remained steady at 62.6 percent.
Financial markets reacted swiftly:
– The US Dollar Index (DXY) tumbled to multi-week lows.
– EUR/USD saw its largest single-day advance in over three months, climbing above the psychological 1.1100 level.
– Other risk assets, including equities and gold, benefitted from the prospect of lower US borrowing costs.
This notable reaction underscores the market’s sensitivity to changes in rate expectations and indicates the dollar’s vulnerability when the US data falls short of forecasts.
## Details from the July Nonfarm Payrolls Report
Key takeaways from the July US jobs report:
– **Headline Job Growth**: Only 150,000 jobs were added, compared to the 200,000 jobs markets had expected.
– For context, the average monthly job gains over the previous year hovered near 200,000, indicating a sharp month-over-month slowdown.
– **Unemployment Rate**: Rose to 4.2 percent, above the 4.0 percent reading in June and surpassing consensus expectations of 4.1 percent.
– **Average Hourly Earnings**: Growth slowed to 3.8 percent year-on-year, down from 4.1 percent the prior month.
– **Labor Force Participation**: Stayed steady at 62.6 percent, suggesting the increase in the unemployment rate wasn’t due to more entrants to the workforce.
This moderation in jobs growth echoes recent softness in employment components of ISM Surveys and other indicators tracking hiring across US industries.
## Market Reaction: EUR/USD Jumps as Dollar Sinks
The currency markets delivered an immediate verdict. The US dollar, already under pressure from mixed economic indicators, accelerated its slide as rate cut bets piled up.
**EUR/USD Surge:**
– The euro spiked from around 1.1010 to reach intraday highs above 1.1120, notching its best daily performance since early April.
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