EUR/USD retreats from six-week highs as Greenback steadies after US NFP revision
The Euro (EUR) edges lower against the US Dollar (USD) on Tuesday, with EUR/USD snapping a two-day winning streak as the Greenback found renewed demand in the wake of the US Nonfarm Payrolls (NFP) benchmark revision. At the time of writing, the pair is trading around 1.1730, retreating from its strongest level since July 24 reached earlier in the day, and is down nearly 0.30% so far.
The US Bureau of Labor Statistics (BLS) reported its preliminary annual benchmark revision, showing payrolls were overstated by 911,000 jobs through March 2025, equivalent to a 0.6% downward adjustment. The revision underscores that the labor market has been cooling more sharply than previously reported, adding weight to expectations that the Federal Reserve (Fed) will cut rates at its September 16-17 meeting. While the data reinforces the dovish case, the fact that such weakness was widely anticipated prompted a wave of US Dollar short-covering, lifting the Greenback from seven-week lows.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is staging a modest recovery after falling to its lowest level in seven weeks earlier in the session. At the time of writing, the index is trading around 97.60, though it remains under pressure from a dovish Fed outlook, with markets expecting the central bank to prioritize maximum employment over price stability within its dual mandate, given that monetary policy is still moderately restrictive.
On the European side, sentiment remains clouded by political risk after French Prime Minister François Bayrou lost a parliamentary confidence vote on Monday, forcing his resignation. Investors are also turning their attention to comments from European Central Bank (ECB) Governing Council member François Villeroy de Galhau, who is scheduled to speak later on Tuesday.
Meanwhile, in the US, attention shifts to inflation data with the Producer Price Index (PPI) on Wednesday and Consumer Price Index (CPI) on Thursday, both seen as pivotal ahead of next week’s Fed decision.
Source : Fxstreet
