- EUR/USD will rise above 1.0850 as the US dollar performs poorly ahead of the US dollar's NFP data release in February.
- President Trump has announced exemptions for more products imported from Canada and Mexico.
- Due to German debt reforms, traders forced ECB dovish bets.
EUR/USD is posting a new four-month height jumping over 1.0850 in the North American session on Friday. The major currency pairs show strength in US dollar (USD) underperformance ahead of US (US) non-farm payroll (NFP) data for February, which will be published at 13:30 PM GMT. The US Dollar Index (DXY), which tracks the value of greenbacks against six major currencies, extends the losing streak on the fifth trading day, dropping to a four-month low of around 103.60.
The greenback remains in the backfoot as investors are increasingly concerned about the US (US) economic outlook due to uncertainty about President Donald Trump's tariff agenda. Market participants believe that higher tariff pressures will be borne by US importers who take over the impact on consumers. Such a scenario would reduce their purchasing power and ultimately domestic demand.
On Thursday, Trump announced tariff easing on many products. This is until April 2nd, when mutual tariffs are expected to be introduced within the US-Mexico-Canada Agreement (USMCA). The US president imposed a 25% tax on Canada and Mexico on Tuesday, but offered a month's exemption to cars after discussing with three big US car manufacturers on Wednesday.
The US NFP report shows the economy has added 160,000 fresh workers, higher than the 143K recorded in January. The unemployment rate is expected to remain stable at 4%. Meanwhile, average hourly revenue, an important measure of wage growth, is expected to rise 4.1% year-on-year. Monthly wage growth is estimated to have grown at a slower pace of 0.3% compared to 0.5% in January. Official labor market data significantly affects market expectations for the Federal Reserve (Fed) monetary policy outlook.
Today's US Dollar Price
The table below shows the rate of change in the US dollar (USD) against today's listed currencies. The US dollar was the strongest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.57% | -0.25% | -0.09% | 0.18% | 0.57% | 0.34% | -0.43% | |
| EUR | 0.57% | 0.33% | 0.53% | 0.75% | 1.16% | 0.93% | 0.15% | |
| GBP | 0.25% | -0.33% | 0.17% | 0.42% | 0.82% | 0.59% | -0.15% | |
| JPY | 0.09% | -0.53% | -0.17% | 0.26% | 0.66% | 0.43% | -0.31% | |
| CAD | -0.18% | -0.75% | -0.42% | -0.26% | 0.39% | 0.17% | -0.57% | |
| aud | -0.57% | -1.16% | -0.82% | -0.66% | -0.39% | -0.23% | -0.96% | |
| NZD | -0.34% | -0.93% | -0.59% | -0.43% | -0.17% | 0.23% | -0.74% | |
| CHF | 0.43% | -0.15% | 0.15% | 0.31% | 0.57% | 0.96% | 0.74% |
The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you select US dollars from the left column and move along the horizon to Japanese Yen, the rate of change shown in the box represents USD (base)/JPY (QUOTE).
Daily Digest Market Movers: EUR/USD advances as ECB appears to announce suspensions in cycles using policies
- The strength of the EUR/USD pair is also driven by the outperformance of the Euro (EUR) amid a decline in European Central Bank (ECB) wagers due to German debt reforms. Market participants have created a 500 million euro (Euro) infrastructure fund on the so-called “debt brake” by German officials, and believe that reforms are inflation for the economy. Such a scenario forces the ECB to slow down the pace of its financial expansion cycle.
- However, ECB President Christine Lagarde declined to measure the impact of Germany's debt reforms at a press conference after interest rate decisions on Thursday, saying the rise in defense and infrastructure spending remains a “work ongoing” and that the ECB will need time to understand “time.”
- Traders believe they can pause the interest rate reduction cycle in April after the ECB's expectations for monetary policy outlook downwards and after the central bank relaxes five times in a row. Before Thursday's monetary policy meeting, traders were fully priced with two more interest rate cuts by summer.
- Christine Lagarde does not offer a specific rate cut plan, repeating the central bank's recurring 'data dependent' and after the ECB cuts the deposit facility rate to 25 basis points (bps) to 2.5% as expected, the rate decision is made “by meeting.”
- The next major trigger for the euro is the debate on boosting defense and infrastructure spending, as well as the sweep of state borrowing rules in the German House of Representatives from March 13th.
Technical Analysis: Over 1.0850 EUR/USD will be damaged
After a decisive breakout earlier this week, exceeding December 6th high of 1.0630, EUR/USD surged above 1.0850 on Friday. The long-term outlook for the major currency pair is bullish as it exceeds the 200-day index moving average (EMA), which trades at around 1.0640.
The 14-day relative strength index (RSI) jumps above 70.00, showing strong bullish momentum.
Looking down, the high of 1.0630 on December 6th serves as the pair's main support zone. Conversely, the psychological levels of 1.0937 and 1.1000 on November 6th are important barriers for the Eurobulls.
Economic indicators
Non-farm salaries
Non-farm pay releases present the number of new jobs created in the US the previous month for all non-farm businesses. Released by US Bureau of Labor Statistics (BLS). Monthly changes to payroll calculations are extremely unstable. This number is subject to strong reviews. This could also cause volatility for the Forex Commission. Generally speaking, high readings are considered bullish in the US dollar (USD), while low readings are considered bearish, but the previous month's reviews and unemployment rates are just as related to the headline numbers. Therefore, market responses depend on how the market evaluates all the data contained within the entire BLS report.
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