The dollar ended the week sharply lower against the euro and other major currencies. The greenback is retreating as the latest U.S. jobs data has dampened expectations of another Fed rate hike. At the time of writing, the EUR/USD is trading at 1.1424, up significantly for the week. 📉
🔍 What’s happening?
The employment figures released this week fell short of market expectations. Job growth came in below forecasts, which immediately reduced the likelihood of another monetary tightening by the Federal Reserve.
As a result, the dollar has lost ground against all its major currency pairs. EUR/USD is climbing toward 1.1424, while GBP/USD is trading at 1.3337. Even USD/JPY is falling despite its usual strength, to 161.3337.
💡 Why does this matter?
This data is a game-changer for traders. A cooling job market sends a clear signal to the Fed: there’s no need to continue tightening policy. U.S. benchmark interest rates should therefore remain stable—or even begin a cycle of cuts—if the trend continues.
For currency pairs, this means the interest rate differential between the U.S. and the eurozone is narrowing. The euro benefits automatically, as does the British pound. Traders who were short on EUR/USD need to reassess their positions.
📊 Our View
In our view, the dollar is on the defensive. The numbers speak for themselves.
The Fed no longer has any room to raise rates without risking a slowdown in growth. Jerome Powell has already hinted at this in his recent remarks: the priority is job stability. With these disappointing data points, the hawkish rhetoric (aggressive on rates) loses all credibility. In Europe, the ECB could play the patience card and let the euro climb steadily. The EUR/USD should continue to gain ground in the coming weeks, with an initial technical target around 1.1500. For French traders: now is the time to favor long positions on the euro against the dollar, with a tight stop below 1.1350 to hedge your position.
✅ Key Takeaway
- The dollar is falling sharply following disappointing U.S. jobs data
- The EUR/USD climbs to 1.1424, capitalizing on the greenback’s weakness
- Bets on a Fed rate hike are plummeting
- The euro could target 1.1500 in the coming weeks
What do you think? Are you taking advantage of the dollar’s weakness to go long on the euro, or are you waiting for a correction before entering the market?
🔎 See also
To learn more, check out all our Forex analyses on ActuTrading Forex 📈
Source: Financial press, U.S. employment data
