06 May 2024, EUR/USD
EURUSD:
On Monday morning, the EUR/USD pair traded in positive territory for the fourth consecutive day, reaching a high of 1.0765. A softer US dollar (USD) is providing some support to the major pair.
The latest US employment data from the US Bureau of Labour Statistics (BLS) showed on Friday that US job growth slowed more than expected in April. The Non-Farm Payrolls (NFP) came in below expectations, rising 175k in April versus 315k (revised from 303k) in March, representing the smallest gain since October 2023. Meanwhile, wage inflation, as measured by the change in average hourly earnings, fell to 3.9 per cent year-on-year from 4.1 per cent. The unemployment rate increased to 3.9% in April from 3.8% in March.
Weaker-than-expected US data has increased the probability of a September rate cut by the US central bank. According to the CME FedWatch tool, financial markets now estimate the probability of a September rate cut at nearly 90%, up from 55% last week. This is putting pressure on the US dollar and creating a tailwind for EUR/USD.
Eurozone inflation remained flat in April as expected, providing the European Central Bank (ECB) with an opportunity to cut interest rates in June. According to economists, the prospect of the ECB diverging from the Federal Reserve (Fed) in cutting interest rates is likely to be "particularly negative" for the Eurozone and could put pressure on the Euro (EUR) against the US Dollar.
Trade recommendation: Trading in the channel 1.0730-1.0810 on the rebound from levels
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