EUR/USD Holds Above 1.1600 Despite Strong US Jobs Report

Key Takeaways

• EUR/USD is trading around 1.1614 after recovering from its initial post-NFP decline and holding above the 1.1600 psychological level.
• August US payrolls rose 162,000, well above expectations, strengthening Fed rate-hike expectations, while the ECB is also widely expected to tighten policy.
• Traders are watching 1.1620 resistance and 1.1600 support as the pair awaits fresh policy and inflation catalysts.

EUR/USD remained resilient after the stronger-than-expected US jobs report, with the pair recovering from its initial decline despite renewed support for the US dollar.

The August payrolls report reinforced expectations that the Federal Reserve could raise interest rates again in September. However, the dollar's gains faded as markets turned their attention to upcoming inflation data and the European Central Bank's policy decision, leaving EUR/USD trading above the 1.1600 level.

Why Traders Are Watching EUR/USD

The initial reaction to the jobs report has shifted into a broader debate over which central bank will maintain the more hawkish policy stance.

While stronger US employment has increased expectations for another Fed rate hike, markets have also largely priced in an ECB rate increase. The next round of economic releases will therefore play an important role in determining whether the policy gap between the two central banks widens or narrows.

Key factors influencing EUR/USD include:

• ECB Policy Decision: Markets are looking for guidance on the pace of further tightening.
• US Inflation: PPI and CPI will help determine whether stronger labour-market conditions translate into renewed inflation concerns.
• Federal Reserve Expectations: Inflation data will influence expectations ahead of the September Fed meeting.
• Treasury Yields: Rising or falling yields could affect demand for the US dollar.
• Relative Policy Outlook: Differences between Fed and ECB expectations remain the primary driver for EUR/USD.

Key Trading Levels

EUR/USD is trading around 1.1614, with price holding above the 20 EMA near 1.1611 after recovering from the post-NFP selloff.

A sustained move above 1.1620 could strengthen short-term momentum and bring 1.1630 and 1.1641 into focus.

A break below 1.1600 would weaken the recovery and shift attention back towards the 1.1590-1.1585 support area.

Bottom Line

EUR/USD has remained resilient despite stronger US employment data, but the next major catalysts are still ahead.

Traders should monitor the ECB policy decision, US PPI, US CPI and the Fed meeting, while watching whether the pair can break above 1.1620 resistance or fall below 1.1600 support.

For a deeper analysis of EUR/USD's outlook, technical levels and the factors influencing the pair, read this article.