EUR\/USD fell for a third straight day, trading near 1.1860 in early European hours on Thursday. Markets are watching US weekly Initial Jobless Claims, followed by the US CPI inflation report on Friday.<\/p>\n
The US dollar strengthened after US labour data reduced expectations of a March Federal Reserve rate cut. US Nonfarm Payrolls rose by 130,000 in January versus a forecast of 70,000, while the Unemployment Rate eased to 4.3% from 4.4% in December, against an expected 4.4%.<\/p>\n
The CME FedWatch tool shows markets pricing nearly a 94% chance the Fed will keep rates unchanged at its next meeting. This is up from 80% the previous day.<\/p>\n
In the euro area, expectations that the European Central Bank may keep rates steady through the year supported the euro. ECB President Christine Lagarde reiterated a data-dependent, \u201cmeeting-by-meeting approach\u201d and said the ECB would not be \u201cprecommitting to a particular rate path.\u201d<\/p>\n
A Reuters January poll found about 85% of economists expect the ECB to keep interest rates unchanged for the rest of 2026.<\/p>\n
The recent US jobs report, showing a strong addition of 130,000 jobs in January, has significantly altered our outlook for the coming weeks. With unemployment dipping to 4.3%, market expectations for a March rate cut have almost completely vanished. This reinforces the underlying strength of the US dollar against the Euro.<\/p>\n
All eyes are now on this Friday’s Consumer Price Index (CPI) report. If inflation data comes in hotter than the 3.1% consensus, perhaps around 3.3%, it would cement the Federal Reserve’s case for holding rates steady. This environment makes buying put options on the EUR\/USD pair an attractive strategy to consider, positioning for a further drop below the current 1.1860 level.<\/p>\n
Meanwhile, the situation in the Eurozone supports a weaker Euro, with recent German industrial production unexpectedly contracting by 0.2%. This economic softness validates the market’s belief that the European Central Bank will keep interest rates on hold for the rest of 2026. This growing policy divergence between a patient Fed and a stationary ECB is the primary driver for the currency pair.<\/p>\n
We saw a similar pattern play out through much of 2025, where delayed rate cut expectations led to sustained dollar rallies. Furthermore, recent positioning data from the CFTC shows that large speculators have already started reducing their net-long positions in the Euro. This suggests the move lower may have more room to run as sentiment continues to shift.<\/p>\n
This divergence is causing options markets to price in more significant price swings for the coming weeks. We should watch the 1.1800 level very closely, as a decisive break below this key psychological support could trigger a faster decline toward the 1.1750 area. Selling out-of-the-money call options could also be a viable strategy to take advantage of capped upside potential.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD dips near 1.1860 as strong US jobs data boosts dollar; markets await jobless claims and CPI.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41669"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41669\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}