The US jobs report delivered a clear upside surprise, strengthening expectations that the Federal Reserve could raise rates again in September. Yet the dollar struggled to extend its initial gains, leaving EUR/USD relatively stable after the first post-NFP reaction. With the ECB also expected to tighten policy this week, the currency pair is increasingly being shaped by a relative question: how hawkish will the Fed be compared with the ECB?
Key Points
- UR/USD is trading around 1.1610 after recovering from its initial post-NFP decline, while the dollar has struggled to sustain its gains.
- US payrolls rose 162,000 in August versus 56,000 expected, raising Fed hike expectations, while markets have also largely priced in an ECB rate increase this week.
- Traders are watching 1.1620 resistance and the 20 EMA near 1.1611, as RSI shows strengthening short-term momentum.
Why worth watching
EUR/USD is now balancing stronger US labour-market data against tightening expectations on both sides of the Atlantic. August payrolls rose 162,000 and July employment was revised from a 23,000 decline to a 21,000 increase, while unemployment remained at 4.1%. The report increased the probability of a September Fed hike, but did not produce a sustained dollar breakout.
The policy comparison is important because the ECB is also expected to raise rates at its September 10 meeting, while US PPI and CPI arrive before the Fed’s September 15–16 decision. Markets currently put the probability of a September Fed hike at around 58%. For EUR/USD, the immediate focus is whether price can reclaim its short-term EMA cluster or break decisively below 1.1600.
Key trading levels
- At 1.1641: Recent high and wider upside resistance
- At 1.1630: Near-term resistance
- At 1.1620: Immediate upside reference
- At 1.1611: 20 EMA and immediate technical pivot
- At 1.1614: Current trade zone
- At 1.1600: Psychological support
- At 1.1590–1.1585: Post-NFP reaction area
- At 1.1566: Recent low and wider downside reference
Technical analysis
EUR/USD is trading around 1.1614, back above its 20 EMA at 1.1611 after recovering from the sharp volatility following the US payroll report. The pair has also continued to hold above the 1.1600 psychological level, suggesting the initial dollar-driven decline has not developed into a sustained EUR/USD breakdown.
Momentum has strengthened alongside the recovery. RSI(14) has climbed to around 66.7, well above its RSI-based moving average near 51.5. This indicates that buyers currently have stronger short-term momentum, although RSI is also approaching the 70 area, making further confirmation from price important.
The immediate technical range sits between 1.1611 support and 1.1620 resistance. A sustained move above 1.1620 could bring 1.1630, followed by the recent 1.1641 high, back into focus. A move below the 20 EMA would weaken the latest recovery and put 1.1600 back under pressure.
- Bullish scenario: EUR/USD holds above the 20 EMA around 1.1611 and breaks through 1.1620. That would provide stronger confirmation that the post-NFP recovery is continuing, with 1.1630 and 1.1641 becoming the next areas to watch.
- Bearish scenario: EUR/USD falls back below 1.1611 and subsequently breaks 1.1600. This would indicate that the latest recovery is losing momentum and could return attention to 1.1590–1.1585.
Explore EURUSD’s 100- and 200-day SMAs for another read.
Disclaimer
The price levels and trade scenarios above reflect the author’s view at the time of writing and do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.
Next market driver
The next test for EUR/USD comes from
- US PPI on Thursday,
- the ECB decision on September 10,
- US CPI on Friday and
- the Fed meeting on September 15–16.
Stronger US inflation could reinforce Fed hike expectations, while the ECB’s guidance will help determine whether the dollar gains a relative policy advantage over the euro. For full scope of upcoming economic events, visit VT Markets’ Economic Calendar.
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EUR/USD is a major forex pair that reflects the euro’s value against the US dollar. A EUR/USD CFD allows traders to take a view on changes in the exchange rate without physically owning the two currencies in exchange.
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Frequently Asked Questions
What is happening to EUR/USD?
EUR/USD is consolidating around 1.1610 after initially falling following stronger-than-expected US payrolls. The dollar has struggled to extend those gains as traders assess upcoming US inflation data alongside Fed and ECB rate expectations.
How is EUR/USD different from a EUR/USD CFD?
EUR/USD refers to the exchange rate between the euro and US dollar. A EUR/USD CFD allows traders to speculate on movements in that exchange rate without physically buying or exchanging the underlying currencies.
Can I trade EUR/USD with VT Markets?
Yes. VT Markets offers EUR/USD CFDs, allowing traders to monitor and trade price movements while tracking factors such as Fed and ECB policy, inflation, employment data and bond yields.
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