The EUR/USD currency pair has seen a huge short covering rally up to five week highs near 1.1750. This positive momentum occurs as the market digests further disappointing employment figures from the US. The US Nonfarm Payrolls report revealed an increase of only 22,000 jobs in August, sharply falling short of expectations, thus intensifying the sell-off in the US Dollar.
The EUR/USD cross is keeping its powerful recovery on track, pushing through of multi-week peaks well above the 1.1700 mark. This movement represents the larger market’s response to the changing realities of the catastrophic US labor market. Weak payroll growth combined with a surging unemployment rate have raised concerns as to the health of the labor market. Such instability is further shaping currency dynamics.
In August, the Employment Situation Report showed a disappointment in the creation of new jobs. Faster payroll growth fell off a cliff to only 22,000, down from a revised 79,000 in July. Odds are, market analysts were expecting better than this, with estimates pegged at something like 75,000 jobs. The underwhelming numbers did much to increase doubt over the robustness of the US economy. Consequently, investor sentiment is dramatically turning in favor of the Euro against the Dollar.
The three- and six-month moving averages for job growth have shown troubling trends, registering at their lowest levels since 2010. This economic decline exacerbates concerns about anticipated dangers in the US labor market. These two factors are central to driving the EUR/USD exchange rate.
Amidst all of the unpredictable chaos around the employment data, the labor force participation rate increased by one-tenth of a percentage point, the first monthly increase since April. It is currently 62.3%, which is up 0.1 percentage points. This can provide a ray of hope within an otherwise bleak employment environment.
Friday, though, former BLS director Erika McEntarfer was shown the door. Unlike other months, this change did not lead to major downward revisions to previous months’ data. Consequently, the markets have been glued to the short term effects of August’s employment report.
The larger financial environment is experiencing significant turbulence. Beyond EUR/USD, all of the major currency pairs are adjusting to changes in overall risk sentiment. As an example, GBP/USD has been extremely strong during an otherwise risk-off market environment. This has a cascading, indirect effect on EUR/USD liquidity and trading environment.
One thing is clear – investors are wading into very choppy waters. A number of brokers are challenging each other by providing attractive spreads and quick execution times for EUR/USD day trading opportunities. In 2025, we’ll show you who we think are the best brokers and platforms for trading EUR/USD. We’ll be using that criteria to identify the platforms that do the best job of helping traders thrive in bearish markets.
It’s the much weaker US Dollar that’s had the biggest influence on gold. Accordingly, its price is shooting increasingly high, nearing the very significant $3,600 threshold per troy ounce. Continued economic pressure is working to drive the Greenback lower. Consequently, precious metals are increasingly attracting investors seeking shelter in a volatile economy.
Monthly wage growth proved strong and stable at 0.3%. Annual growth was down a bit from last December at 3.7%, down 0.2 percentage points. This unexpected trend might create new challenges to an already tricky Federal Reserve decision-making about interest rates and other aspects of monetary policy.
How the Federal Reserve interprets this employment data will surely influence ongoing conversations about where monetary policy should go from here. Our analysts say persistent weakness in payrolls would be a strong signal for the Fed to do more. They’re just doing their best to find their way through this crazy new economic reality.
“All estimates and opinions included in this report constitute our judgements as of the date of this report.” – BNP Paribas
The response from the Federal Reserve to this employment data will likely shape monetary policy discussions moving forward. Analysts expect that continued weakness in payroll numbers may prompt further action from the Fed as they navigate through this uncertain economic landscape.