- EUR/USD stays under bearish pressure and trades below 1.1400 on Friday.
- Nonfarm Payrolls in the US rose by 139,000 in May.
- Markets lean toward a Fed policy hold in July after the employment data.
Following a quiet beginning to the European session, EUR/USD turned south in the second half of the day and declined below 1.1400. At the time of press, EUR/USD was down 0.55% on the day at 1.1382.
The US Dollar (USD) benefited from the labor market data and weighed on EUR/USD in the American session on Friday.
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls rose by 139,000 in May. This reading came in above the market expectation of 130,000. In this period, the Unemployment Rate remained unchanged at 4.2%, as forecast.
The CME Group FedWatch Tool's probability of a 25 basis points (bps) rate cut in July dropped below 20% from about 30% before the release of the employment report. Reflecting the renewed USD strength, the USD Index was last seen 0.55% on the day at 99.25.
The US economic calendar will not feature any high-tier data releases in the remainder of the day. Meanwhile, Wall Street's main indexes trade decisively higher following the opening bell on improving sentiment around the US economic outlook.
Earlier in the week, the European Central Bank (ECB) announced that it lowered key rates by 25 bps after the June policy meeting. Commenting on the policy outlook, ECB President Christine Lagarde said that they might be approaching the end of the easing cycle.
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.
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 advances toward 1.1450 as USD wilts ahead of US-China trade talks
EUR/USD attracts some dip-buying at the start of a new week, extending gains toward 1.1450 in European trading on Monday. The pair capitalizes on renewed US Dollar weakness as traders remain unnerved ahead of the much-awaited US-China trade talks. Hawkish ECB commentary also underpins the pair.
GBP/USD stretches higher toward 1.3600 amid sustained US Dollar weakness
GBP/USD gains further ground, eyeing 1.3600 in the European session on Monday, helped by a weaker US Dollar. Trade uncertainty dampens sentiment among US businesses, prompting traders to reassess the Greenback's safe-haven status, acting as a tailwind for the pair ahead of US-China trade talks.
Gold price bounces up toward $3,340-$3,350 as the US Dollar softens
Gold is showing moderate gains on Monday, trimming losses following a nearly 2% sell-off during the last two trading days. The pair is on a bearish correction, but a weaker US Dollar ahead of the US-China trade meeting has provided the support for today’s Gold recovery.
Top 3 Crypto Price Prediction: Bitcoin, Ethereum, and Ripple– Weekend gains at risk amid US-China trade talks
The broader cryptocurrency market edges marginally higher on Monday as underlying weakness gradually takes effect. Bitcoin (BTC), Ethereum (ETH), and Ripple’s XRP are facing headwinds after a minor recovery over the weekend, risking a reversal similar to the flash crash on Thursday.
Tesla stock down 17% as Musk-Trump breakup worries Wall Street Premium
Tesla (TSLA) stock is facing one of its worst trading sessions in a long time on Thursday. Shared closed above $332 on Wednesday, but at the time of writing late in the afternoon session, TSLA has traded below $274, suffering a 17% sell-off.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.