EUR/USD surpasses 1.1700 as weak US NFP drags the dollar and yields lower

The Euro (EUR) skyrockets against the US Dollar (USD) this Friday after the disappointing Non-Farm Payroll (NFP) report showed only 22,000 jobs added in August, well below the expected 75,000 and the revised 79,000 for July (, revised from 73,000). The Unemployment Rate rose to 4.3% from 4.2%, while Hourly Earnings increased by 0.3% month-on-month and 3.7% year-on-year, in line with forecasts. EUR/USD jumped more than 40 pips to trade around 1.1740, rising nearly 0.70% on the day.

The weaker labor data highlighted the ongoing fragility of the U.S. labor market, reinforcing expectations that the Federal Reserve (Fed) will cut rates at its meeting on September 16-17. Although markets are already pricing in a 25 basis point cut, the weak payroll data is likely to fuel speculation about a possible larger move of 50 basis points to counteract the economic slowdown.

U.S. Treasury yields plummeted, with the 10-year bond falling to 4.09% and the 2-year bond, sensitive to rates, dropping to 3.50%, both at their lowest levels since April 7. This sharp decline reflected increasing expectations of a deeper monetary easing, further pressuring the greenback.

The Dollar Index (DXY), which measures the dollar against six major currencies, weakened sharply after the release, falling below 98.00 to quote near 97.65, down almost 0.65% on the day. The index hovers around the lower end of the narrow range established since August.

Meanwhile, EUR/USD is also testing the upper limit of its recent range near 1.1730. A break above this level could pave the way towards the peak of July 24 at 1.1789, while immediate support is at 1.1700 and the 50-day moving average at 1.1666.

Warning: For informational purposes only. Past performance does not guarantee future results.