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Euro US Dollar (EUR/USD) Wavers near Weekly High ahead of Key US Data

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Euro US Dollar (EUR/USD) Volatile ahead of US Jobs Report

The Euro US Dollar (EUR/USD) exchange rate is moving without a clear trajectory this morning ahead of the hotly anticipated US non farm payrolls.

At the time of writing the EUR/USD exchange rate is trading at $1.0883, virtually unchanged from this morning’s opening rate.         

Euro (EUR) Lifted by Hawkish ECB Sentiment

The Euro (EUR) is fluctuating amid a lack of data, as hawkish commentary from European Central Bank (ECB) policymakers keeps the common currency afloat.

While yesterday’s Eurozone inflation data printed as expected at 2.8%, the decline was significantly less weighty than in recent months, allowing ECB President Christine Lagarde to continue pushing back against interest rate cuts.

Falling only marginally from 2.9%, signs of further struggle during the ECB’s ‘last leg’ in curbing stubborn inflation serve to buoy EUR today, as markets resize their rate cut expectations.

Maeva Cousin, an economist at Bloomberg, said:

‘A smaller decline in headline inflation than Bloomberg Economics had anticipated adds to our view that the ECB probably won’t think it has enough information by the time the March projections are assembled to make substantial downward revisions to its medium-term outlook. Chances are this judgment is delayed until June, giving hawks the space needed to push the first rate cut until then.’

US Dollar (USD) Muted ahead of Jobs Data

The US Dollar (USD) is rangebound this morning as investors remain hesitant to place any aggressive bets on the ‘Greenback’ ahead this afternoon’s highly impactful employment data.

Despite Federal Reserve Chair Jerome Powell pushing back against a March interest rate earlier this week, USD investors appear wary this morning ahead of expectedly bleak data releases.

Further pressuring the US Dollar today is an increasing appetite for risk, serving to limit the safe-haven USD’s movements.

Euro US Dollar Exchange Rate Forecast: US Employment Data to Sink the ‘Greenback’?

Looking ahead, highly impactful US jobs data may drive significant USD volatility this afternoon. The US non farm payrolls are due for release, and economists estimate that 180,000 new jobs will have been added to the economy in January.

Following December’s unexpected surge in new jobs, a return to worsening labour market conditions last month may see the US Dollar plummet, amid renewed signs of an unstable and volatile employment sector.

The release of the latest US unemployment rate could then serve to worsen USD’s downside, with an expected increase in January, up to 3.8%.    

However, later in the afternoon the finalised Michigan Consumer Sentiment print could offset some of USD’s potential losses. Confirmation that economic sentiment has reached its highest point since July 2021, at 78.8 in January, may prevent the ‘Greenback’ from plummeting.

Looking to the Eurozone, a lack of economic data for the remainder of the week leaves Sterling vulnerable to shifts in risk appetite. A shift towards gloomy trade could see the Euro fall against the safe-haven USD.