- The EUR/USD weakens after the June non -agricultural payroll report that highlights a resilient US labor market, relieving the pressure on the Fed to cut rates in July.
- American returns provided support to the dollar before independence day on Friday, which could impact liquidity and volatility.
- The EUR/USD faces short -term resistance at the psychologically significant level of 1,1800.
The euro (EUR) is weakening against the US dollar (USD) on Thursday during the American session after a series of US economic data provided some relief for the dollar.
After reaching a maximum of several years of 1,1830 on Tuesday, the Alcista rally faces resistance with the EUR/USD quoting below 1,1800 at the time of writing.
Thursday’s market approach was in the publication of US employment data. As investors continued to search for clues about when the Federal Reserve (FED) could begin to cut rates, the attention focused on the June Non -Agricultural Payroll (NFP) report.
The main number of the NFP revealed that 147,000 jobs were added to the US economy in June, above the expectations of analysts of an increase of 110,000 and the 144,000 jobs created in May. The unemployment rate fell to 4.1% from 4.2% and salary growth remained stable.
Additional metrics such as the unemployment rate, participation in the workforce and the salary growth indicators, which are key indicators that the Federal Reserve observes closely to evaluate inflation trends, are also included in the report.
A resilient labor market relieves the pressure on the Fed to cut interest rates, which has resulted in a modest recovery in US yields, supporting the dollar.
EUR/USD faces short -term resistance in 1,1800
The EUR/USD torque has been exhibiting a strong bullish impulse, recently rising to a maximum of 1,1830. A proof of this level has caused some benefits shots, pushing the return torque below the current psychological resistance zone in 1,1800.
Despite this setback, the price is maintained above the simple mobile average (SMA) of 10 days and 20 days, currently providing support around 1,1695 and 1,1592, respectively. Both means are in ascending tendency, reflecting a continuous strength in the short and medium term and reinforcing the broader upward structure.
EUR/USD daily graphics
The relative force index (RSI) is currently about 68, just below the overcompra territory, indicating a strong impulse but also suggesting the possibility of a brief consolidation or fall.
In a bullish stage, if the torque is maintained above the support level of 1,1695 and recover upward traction, it could follow a new test and a possible breakout above 1,1830.
EMPLOYMENT – FREQUENT QUESTIONS
The conditions of the labor market are a key element to evaluate the health of an economy and, therefore, a key factor for the assessment of currencies. A high level of employment, or a low level of unemployment, has positive implications for consumer spending and, therefore, for economic growth, which drives the value of the local currency. On the other hand, a very adjusted labor market – a situation in which there is a shortage of workers to cover vacancies – can also have implications in inflation levels and, therefore, in monetary policy, since a low labor supply and high demand lead to higher wages.
The rhythm to which salaries grow in an economy is key to political leaders. A high salary growth means that households have more money to spend, which usually translates into increases in consumer goods. Unlike other more volatile inflation sources, such as energy prices, salary growth is considered a key component of the underlying and persistent inflation, since it is unlikely that salary increases will fall apart. Central banks around the world pay close attention to salary growth data when deciding their monetary policy.
The weight that each central bank assigns to the conditions of the labor market depends on its objectives. Some central banks have explicitly related mandates to the labor market beyond controlling inflation levels. The United States Federal Reserve (Fed), for example, has the double mandate to promote maximum employment and stable prices. Meanwhile, the only mandate of the European Central Bank (ECB) is to maintain inflation under control. Even so, and despite the mandates they have, labor market conditions are an important factor for the authorities given its importance as an indicator of the health of the economy and its direct relationship with inflation.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
