- EUR/USD extends the rally to 1.0765 amid the weaker USD on Monday.
- The US job growth slowed more than expected in April, boosting the odds of a September rate cut from Fed.
- Economists said the prospect of the ECB diverging from the Fed on rate cuts might weigh on the Euro.
The EUR/USD pair trades in positive territory for the fourth consecutive day near 1.0765 on Monday during the early Asian trading hours. The softer US Dollar (USD) provides some support to the major pair. Traders await the HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone, along with the Eurozone Producer Price Index (PPI), due later in the day.
The recent US Employment data from the US Bureau of Labor Statistics (BLS) showed on Friday that US job growth slowed more than expected in April. The Nonfarm Payrolls (NFP) came in weaker than expected, rising by 175K in April from 315K rise (revised from 303K) in March, the smallest gain since October 2023. Meanwhile, wage inflation, as measured by the change in the Average Hourly Earnings, dropped to 3.9% on a yearly basis from 4.1%. The Unemployment Rate ticked up to 3.9% in April from 3.8% in March.
The weaker-than-expected US data boosted the odds of a September rate cut from the US central bank. Financial markets have priced in a nearly 90% chance of September rate cuts, up from 55% last week, according to the CME FedWatch tool. This, in turn, weighs on the Greenback and creates a tailwind for the EUR/USD pair.
Across the pond, the final reading of the Eurozone Services PMI is expected to remain steady at 52.9 in April, while the Composite PMI is projected to remain unchanged at 51.4. Furthermore, the Eurozone March PPI is estimated at -7.7% YoY versus -8.3% in February.
Eurozone inflation held steady as expected in April, triggering the case for the European Central Bank (ECB) to cut interest rates in June. Economists said the prospect of the ECB diverging from the Federal Reserve (Fed) on interest rate cuts is likely to be “particularly negative” for the Eurozone and might exert some selling pressure on the Euro (EUR) against the USD.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.