Insights 
VT 
The EURUSD pair experienced a pullback after a softer than expected Non-Farm Payroll (NFP) report. The USD was broadly sold off due to expectations of a more hawkish report; this reaction led to the market now pricing 59 basis points of easing by year-end, whereas it was 35 basis points prior. Fed officials, including Williams and Daly, have hinted at a potential rate cut in September, making it likely that Fed Chair Powell may signal a similar direction at the Jackson Hole Symposium.
On the EUR side, there haven’t been new fundamental changes since the US-EU trade deal, which established tariffs at 15%. The European Central Bank (ECB) remains neutral regarding rate cuts, contingent on receiving notably negative data. The market is currently pricing a 14 basis point easing by year-end, suggesting a 50% chance of another rate cut occurring.
Technical Analysis
Technically, on the EURUSD daily chart, resistance is at the 1.1575 level, with potential for a drop to 1.1065 if sellers dominate. On the 4-hour chart, sellers depend on this resistance to push for lows. The 1-hour chart indicates minor support at the 1.15 level, where buyers may aim for a breakout above 1.1575, while sellers focus on further declines. Upcoming events include US ISM Services PMI today and US Jobless Claims figures on Thursday.
We are seeing a major shift in thinking about the US dollar after last week’s jobs report. The Non-Farm Payrolls number for July 2025 came in at just 150,000, well below the 220,000 that was expected. This has led traders to aggressively price in Federal Reserve rate cuts before the end of the year.
The market is now anticipating nearly 60 basis points of cuts by December, a huge change from just 35 basis points before the data. We saw a similar quick repricing back in late 2023 when the market got ahead of itself expecting early rate cuts in 2024. This suggests that any strong data could cause an equally fast reversal.
European Central Bank Policy
Meanwhile, the European Central Bank seems content to wait and see, taking a more neutral position on its own policy. With Eurozone inflation proving sticky at 3.1% last month, they need to see a significant downturn before considering more cuts. This difference in central bank policy is the main force pushing EURUSD higher.
This brings us to the key technical level of 1.1575, which has capped rallies twice in the past quarter. For traders who believe this resistance will hold, buying cheap, short-dated put options below the 1.1500 support offers a defined-risk way to bet on a reversal. This strategy protects against a sudden upside breakout driven by more weak US data.
Conversely, a break above 1.1575 would signal a new bullish leg, likely targeting the 1.1700 level not seen since early 2022. Traders could use call options to position for this breakout with limited risk. All eyes will be on today’s ISM Services PMI and Thursday’s Jobless Claims to see if the weak jobs data was a one-off event.
