EUR/USD extends its upside above 1.1100 as signs of a slowdown in US labor demand weigh on the US Dollar.
Investors await the US NFP for August as markets wonder if July’s report was just a bump or the start of a more serious deterioration.
The ECB is expected to cut interest rates two more times this year.
EUR/USD extends its winning spree for the third consecutive trading session on Friday, trading close to a fresh weekly high of 1.1120. Decent gains in the shared currency pair are driven by sheer weakness in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides further below the crucial support of 101.00.
The appeal for the US Dollar has weakened after United States (US) JOLTS Job Openings data for July and the ADP Employment data for August, released earlier this week, deepened fears of deteriorating labor market conditions. Fresh job vacancies and additions of payrolls in the private sector stood at 7.67 million and 99K, respectively, the lowest in more than three-and-a-half years.
The US ISM Services Purchasing Managers’ Index (PMI) data for August came in better than projected but failed to cushion the US Dollar.
Signs of slowing labor demand prompted market expectations that the Federal Reserve (Fed) could start cutting interest rates aggressively. According to the CME FedWatch tool, the possibility for the Fed to begin reducing interest rates by 50 basis points (bps) to 4.75%-5.00% has increased to 41% from 34% recorded a week ago.
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