- The Euro climbs as Nonfarm Payrolls show weak hiring, rising unemployment, and steady wage growth in August.
- US 2-year Treasury yield tumbles as markets fully price in September rate cut; DXY drops 0.70% to 97.57.
- Traders eye US CPI next week to confirm disinflation trend, while EU GDP Q2 revised slightly higher.
The EUR/USD advanced during the North American session after the latest employment report in the United Sates (US) showed the labor market is deteriorating. Consequently, investors ditched the US Dollar as the first rate cut by the Federal Reserve in 2025 looms. The pair trades at 1.1714, up by 0.50%.
US jobs data miss sparks Treasury yield plunge, Dollar sell-off
The Nonfarm Payrolls (NFP) report showed that the economy in the US created fewer jobs than expected, triggering a market reaction. Initially, US equities were bought and rose, but fears of a deeper economic slowdown triggered a flight to safety, and Wall Street ended the session in the red.
Further jobs data revealed a downward revision to June’s print, the Unemployment Rate rose, and Average Hourly Earnings remained steady. In response to the report, the US 2-year T-note yield plunged as investors fully priced in a rate cut by the Fed at the upcoming September meeting.
Consequently, the Greenback plummeted. The US Dollar Index (DXY), which tracks the performance of the buck’s value against a basket of peers, is down 0.70% at 97.57.
The Chicago Fed President revealed that for him the September meeting is live. At the same time, the US Treasury Secretary Scott Bessent said that the Fed must recommit to maintaining the confidence of the American people.
After the US jobs report, trader focus shifts to next week’s Consumer Price Index (CPI) figures in the US. If the disinflation process evolves, this will cement the case for a rate cut at the September 16-17 meeting.
Across the pond, Gross Domestic Product (GDP) figures for the second quarter of 2025 were revised upward on a yearly basis. Quarterly, the economic growth was aligned to the previous print.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.10% | 0.28% | 0.68% | -0.16% | -0.06% | -0.20% | |
| EUR | 0.19% | 0.09% | 0.40% | 0.89% | 0.03% | 0.15% | 0.00% | |
| GBP | 0.10% | -0.09% | 0.20% | 0.77% | -0.06% | 0.04% | -0.04% | |
| JPY | -0.28% | -0.40% | -0.20% | 0.47% | -0.44% | -0.31% | -0.43% | |
| CAD | -0.68% | -0.89% | -0.77% | -0.47% | -0.79% | -0.73% | -0.81% | |
| AUD | 0.16% | -0.03% | 0.06% | 0.44% | 0.79% | 0.10% | 0.02% | |
| NZD | 0.06% | -0.15% | -0.04% | 0.31% | 0.73% | -0.10% | -0.07% | |
| CHF | 0.20% | -0.01% | 0.04% | 0.43% | 0.81% | -0.02% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Increasing chances for Fed cut boost Euro
- EUR/USD rallied after the BLS reported the economy generated just 22K jobs in August, far below the 75K consensus and slowing from July’s upwardly revised 79K. Average Hourly Earnings increased 0.3% MoM, matching forecasts, while the Unemployment Rate edged up to 4.3% from 4.2%.
- In response, futures tied to the December 2025 fed funds contract priced in nearly 65 basis points of easing by year-end.
- Ahead of the September Fed meeting, markets indicate a 100% probability of a 25-basis-point rate cut, and a 14% probability of a 50-basis-point cut, based on current pricing before the release of August’s Consumer Price Index (CPI) next week.
- The European Union (EU) GDP in Q2 2025 was unchanged at 0.1% QoQ. On an annual basis, the economy grew 1.5%, up from the previous print and estimates of 1.4%.
- The German Institute for Economic Research (DIW Berlin) revealed that Germany’s economy is showing tentative signs of emerging from a protracted slump, with gross domestic product seen inching up by 0.2% in 2025.
- Expectations that the Fed will reduce rates at the September meeting continued to trend higher. The Prime Market Terminal interest rate probability tool had priced in a 90% chance of the Fed easing policy by 25 basis points (bps) and a 10% chance for a 50 bps cut. The ECB is likely to keep rates unchanged, with a 91% probability, and only a 9% chance of a 25 bps cut.
Technical outlook: EUR/USD set to end the week above 1.1700
The EUR//USD rallied past 1.1700, hitting a five-week high of 1.1759, before retreating somewhat. Momentum shows that buyers remain in charge as depicted by the Relative Strength Index (RSI).
With that said, the next resistance for the EUR/USD would be 1.1759, ahead of 1.1800. A breach of the latter will expose the year-to-date peak at 1.1829. Conversely, a daily close beneath 1.1700 can set the tone to challenge 1.1650 ahead of 1.1600. Further losses lie below at the 100-day SMA at 1.1526.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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