- The US dollar weakened against other major currencies after a US Labor market report showed continued slowing conditions, reinforcing expectations of a rate cut by the Federal Reserve at its September policy meeting.
- EUR/USD rose to a three-week high of 1.0842 and closed the week steady near those gains.
According to reliable trading companies' platforms, the euro dollar price will remain stable around the current situation until the reaction to the final results of the French elections, then the announcement of US inflation figures and the testimony of the US Federal Reserve Governor Jerome Powell.
According to economic calendar results, the Bureau of Labor Statistics lowered its previous estimates of US job growth in April and May by 111,000 and said the unemployment rate rose to 4.1% in June. Also announced, the June nonfarm payrolls report fell to 206,000 from 272,000, but this beat expectations of 190,000. However, the market reaction in currencies and bonds suggests that the focus is shifting away from the previous two months' revision and the unemployment rate. Commenting on the event and the reaction, Carl Shamota, senior analyst at Corpay, said: "Traders are selling dollars and interest rates are falling due to the possibility of a rate cut in September."
The result is that the US labor market is slowing down, which is consistent with slowing wage growth that will affect inflation in the future, allowing the Fed to cut rates, possibly as early as September. In fact, the BLS also reported that average hourly earnings rose 3.9% on an annual basis, the lowest in three years. As a result, Richard Carter, an analyst at Quilter Cheviot, says: "The US labor market appears to be slowing down." And "Fed policymakers raised concerns at their last policy meeting that the unemployment rate could rise very quickly if interest rates remain high for too long."
Last Tuesday, Federal Reserve Chairman Jerome Powell said at a conference in Portugal that the Fed would consider cutting rates if the Labor market deteriorates. Moreover, he added that there is still a risk that the unemployment rate could rise further from here. As is known, the US jobs report is the latest in a series of soft economic prints. On Wednesday, the dollar fell after the release of the ISM services PMI, which came in well below expectations.
On the stock trading front, The S&P 500 and Nasdaq 100 closed at record highs on Friday, up 0.5% and 1%, respectively, while the Dow Jones Industrial Average rose 67 points. Meanwhile, market sentiment was boosted by data showing US hiring slowed in June and the country’s unemployment rate rose to its highest level since late 2021, putting downward pressure on Treasury yields and increasing speculation about a possible interest rate cut in September.
Nonfarm payrolls rose by 206,000 in June, with job growth in the previous two months revised down to a total of 111,000. Communications services stocks led the session’s gains, with Meta up 5.9% and Alphabet up 2.5%. Consumer staples also performed well, with Walmart up 2.6% and Costco up 2.7%. Conversely, energy stocks were down, with Exxon down 1.3% and Chevron down 1.6%.
Over the week, the S&P 500 posted its fourth positive week in the past five, up 1.2%, the Nasdaq 100 rose 2.4%, and the Dow Jones rose 0.3%.
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EUR/USD Technical analysis and forecast:
we expect the EUR/USD to remain on its current path until the markets react to the announcement of the French election results, then the announcement of the US inflation figures and the statements of the US Federal Reserve Governor Jerome Powell. According to the performance on the daily chart, the EUR/USD currency pair is on an upward rebound path and bulls' control over the trend will strengthen if it moves towards the resistance levels of 1.0920 and the psychological resistance of 1.1000, respectively. On the other hand, and over the same period, the support level of 1.0720 will be a threat to the current upward rebound.
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