EUR/USD retreats from 1.0800 as Fed pause bets fade post mammoth US NFP report

The EUR/USD pair has sensed selling interest after a pullback move to near the round-level resistance of 1.0800 in the early Asian session. The major currency pair has resumed its downside journey as the stronger-than-anticipated United States Nonfarm Payrolls (NFP) reports have dismantled the expectations of a pause in the interest rate escalation by the Federal Reserve (Fed) after reaching 4.50-4.75%. The street considered that a meaningful declining trend in the inflationary pressures is sufficient to pause interest rate hiking for a period of time to assess the impact of policy tightening till done.

S&P500 witnessed a massive sell-off a gigantic jump in the additions to the US labor force might force a rebound in inflation projections, portraying a risk-aversion theme. Three-day winning spree in the 500-stock basket terminated on expectations that further increases in interest rates would deepen recession fears ahead. The US Dollar Index (DXY) displayed a juggernaut rally to near 102.60 and is expected to continue its upside journey as mammoth employment generation has cleared that battle against inflation is far from over.

A significant jump in the US employment numbers weakened the demand for US government bonds, which led to a jump in the 10-year US Treasury yields above 3.51%.

The United States economy has added fresh 517K, extremely higher than the consensus of 185K and the former release of 260K. The Unemployment Rate was trimmed to a multi-decade low of 3.4% lower than the expectations and the prior release of 3.6% and 3.5% respectively. Apart, from that Average Hourly Earnings have dropped to 4.4% from 4.9% released earlier. A decline in earnings data might keep inflation projections in check as lower liquidity with households will not allow them to increase spending.

On the Eurozone front, investors are keeping an eye on Retail Sales data, which is scheduled for Monday. The contraction in the economic data is expected to trim to 2.7% from the prior contraction of 2.8%. A spree of contraction in consumer spending might trim projections for the Consumer Price Index (CPI), which will delight the European Central Bank (ECB) ahead.