- EUR/USD remains stable around 1.1760 amid lighter trading due to holidays.
- Positive projections from US NFP data offer some support for the US dollar.
- Concerns are growing that inflation may fall short of the ECB’s 2% target within the eurozone.
The EUR/USD pair is expected to fluctuate within a narrow range close to 1.1760 during the Asian session on Friday. Activity in major currency pairs is limited as the US markets observe Independence Day holiday.
The US Dollar is demonstrating a recovery, largely influenced by better-than-expected non-farm payroll data from June. On Thursday, it was reported that the US economy added 147,000 jobs, surpassing the estimate of 110,000.
While the improved NFP figures provide some support to the US dollar, it’s maybe not sustainable. The report indicates a decline in momentum within private sector employment, with only 74,000 jobs added in June compared to an average of 115,000 over the previous three months. This situation may not give much comfort to certain Federal Reserve officials, including Vice Chair Michelle Bowman, who advocates for interest rate cuts at upcoming policy meetings in light of potential labor market concerns.
As the July 9 tariff deadline looms, investors are on edge. President Donald Trump has announced plans to communicate tariff rates in letters to nations lacking finalized trade agreements.
In the eurozone, a strong valuation of the euro has raised alarms about the possibility of inflation falling below the ECB’s 2% target. A senior official from the ECB mentioned that if the euro strengthens excessively, it could pose a challenge.
When domestic currencies strengthen, products from export-focused companies can lose competitiveness, forcing them to offer their goods at lower prices domestically.
