EUR/USD Volatile Ahead Of Friday’s NFP Release
EUR/USD has attempted to rally for the fourth straight day, but the market has moved into the middle ahead of Friday’s key US Nonfarm Payrolls (NFP) release. The euro suffered a sharp rejection from the 1.0850 level on Thursday, ending a three-day winning streak for the Fibonacci. EUR/USD has had a great week, rising 4.6% from the bottom to the top of Monday’s opening bid.
The forex market has rebalanced after expectations for a rate cut plummeted this week. According to the interest rate market, the European Central Bank (ECB) is widely expected to cut interest rates only once more in 2025 after Thursday’s 25 bps rate cut. With the euro facing a much tighter interest rate differential than previously expected, EUR/USD has moved higher this week.
Markets are still looking for further rate cuts to ease financing and borrowing costs, but persistently high inflation in the EU (and now the US following recent increases in key inflation metrics) has hampered the ability of central banks to enact rate adjustments.
US President Donald Trump has changed his stance on tariffs once again, unveiling a temporary suspension of tariffs on all products covered by the USMCA agreement, which he personally negotiated in his first term. Even as the Trump administration continues to walk back previous tariff threats, markets are finding it difficult to regain enough risk appetite to move up.
On Friday, US Nonfarm Payrolls (NFP) will be even more important as investors closely monitor economic indicators. While the US economy remains strong overall, signs of weakness are emerging in the labor market. Moreover, a fresh wave of inflationary pressures, mainly due to tariff concerns, is dampening growth expectations.
Source: FXStreet
