- While there are expectations for the Fed to cut rates, EUR/USD is seeing a decline as the US dollar strengthens.
- The US non-farm payrolls for March 2025 may see an increase of 911,000 jobs.
- The European Central Bank is likely to keep interest rates unchanged for the second meeting in a row on Thursday.
During Asian trading hours on Wednesday, EUR/USD is hovering around 1.1700, struggling after experiencing a drop of roughly 0.5% in the last session. Even with the Federal Reserve possibly initiating interest rate cuts next week, the currency pair faced headwinds as the US dollar gained traction. The CME FedWatch tool indicates over a 93% chance that the Fed will reduce rates by 25 basis points at its policy meeting in September, an increase from 86% just a week earlier.
The revision of the US Non-Farm Payrolls for March 2025 is projected to show an addition of 911,000 jobs, which represents about 76,000 fewer positions per month than initially anticipated, pointing to a softer labor market. The final revision will be published in February 2026 in conjunction with the January 2026 Employment Status Report, as noted by the BLS in a press release.
Market participants are looking forward to an inflation report that could provide insights into the Fed’s future policies. The US Producer Price Index (PPI) for August is set to be released on Wednesday, with the Consumer Price Index (CPI) following on Thursday.
The European Central Bank (ECB) is widely predicted to maintain interest rates during its second consecutive meeting on Thursday, supported by stable growth and inflation levels that are close to its targets. Traders will be attentive to any signals regarding the central bank’s outlook for the remainder of the year.
Meanwhile, a vote of no confidence against Prime Minister François Bailloux has passed in the French parliament, resulting from the party’s failure to agree on budget cuts. This leaves President Emmanuel Macron unable to appoint a fifth prime minister in less than two years.
Traders are also paying attention to the geopolitical landscape, particularly after Poland expressed heightened concerns over air defense in light of warnings from the Ukrainian Air Force. Ukraine has alerted about a potential Russian drone incursion into Polish airspace, which could be a violation of NATO airspace.
