- EUR/USD loses ground as the US Dollar rebounds following Friday’s sharp decline.
- A weaker US jobs report led markets to price in two interest rate cuts by the Fed.
- The Euro may remain resilient as the ECB is likely to delay its rate cuts.
EUR/USD depreciates after registering around 1.5% gains in the previous session, trading around 1.1560 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) recovers its losses of the prior trading day.
However, the US Dollar may struggle over a worse-than-expected jobs report in the United States (US) released on Friday, which prompted market reaction to price in two interest rate cuts by the Federal Reserve (Fed). Traders are now pricing in 63 basis points (bps) of cuts by year-end, up from around 34 bps on Thursday, with the first cut seen in September.
Nonfarm Payrolls (NFP) in the United States (US) rose by 73,000 in July, compared to a 14,000 increase (revised from 147,000) seen in June. This figure came in weaker than the market expectation of 110,000. Additionally, the Unemployment Rate ticked higher to 4.2% in July from 4.1% in June, as expected.
The downside of the EUR/USD pair could be limited as the Euro (EUR) is poised to stand strong as the European Central Bank (ECB) is expected to delay its rate cuts. This comes as inflation is projected to remain above the ECB’s near-term forecasts.
Recent data showed eurozone consumer inflation holding steady at 2.0% in July, slightly above the market forecast of 1.9%. Additionally, investors are weighing the effects of newly imposed US tariffs, which include a 15% duty on EU exports to the United States.
