EUR/USD jumps to 1.1714 as weak US jobs data sinks Dollar

• The Euro climbs as Nonfarm Payrolls show weak hiring, rising unemployment, and steady wage growth in August.
• US 2-year Treasury yield tumbles as markets fully price in September rate cut; DXY drops 0.70% to 97.57.
• Traders eye US CPI next week to confirm disinflation trend, while EU GDP Q2 revised slightly higher.

The EUR/USD advanced during the North American session after the latest employment report in the United Sates (US) showed the labor market is deteriorating. Consequently, investors ditched the US Dollar as the first rate cut by the Federal Reserve in 2025 looms. The pair trades at 1.1714, up by 0.50%.

US jobs data miss sparks Treasury yield plunge, Dollar sell-off

The Nonfarm Payrolls (NFP) report showed that the economy in the US created fewer jobs than expected, triggering a market reaction. Initially, US equities were bought and rose, but fears of a deeper economic slowdown triggered a flight to safety, and Wall Street ended the session in the red.

Further jobs data revealed a downward revision to June's print, the Unemployment Rate rose, and Average Hourly Earnings remained steady. In response to the report, the US 2-year T-note yield plunged as investors fully priced in a rate cut by the Fed at the upcoming September meeting.

Consequently, the Greenback plummeted. The US Dollar Index (DXY), which tracks the performance of the buck's value against a basket of peers, is down 0.70% at 97.57.

The Chicago Fed President revealed that for him the September meeting is live. At the same time, the US Treasury Secretary Scott Bessent said that the Fed must recommit to maintaining the confidence of the American people.

After the US jobs report, trader focus shifts to next week's Consumer Price Index (CPI) figures in the US. If the disinflation process evolves, this will cement the case for a rate cut at the September 16-17 meeting.

Across the pond, Gross Domestic Product (GDP) figures for the second quarter of 2025 were revised upward on a yearly basis. Quarterly, the economic growth was aligned to the previous print.

Daily digest market movers: Increasing chances for Fed cut boost Euro

• EUR/USD rallied after the BLS reported the economy generated just 22K jobs in August, far below the 75K consensus and slowing from July's upwardly revised 79K. Average Hourly Earnings increased 0.3% MoM, matching forecasts, while the Unemployment Rate edged up to 4.3% from 4.2%.
• In response, futures tied to the December 2025 fed funds contract priced in nearly 65 basis points of easing by year-end.
• Ahead of the September Fed meeting, markets indicate a 100% probability of a 25-basis-point rate cut, and a 14% probability of a 50-basis-point cut, based on current pricing before the release of August's Consumer Price Index (CPI) next week.
• The European Union (EU) GDP in Q2 2025 was unchanged at 0.1% QoQ. On an annual basis, the economy grew 1.5%, up from the previous print and estimates of 1.4%.
• The German Institute for Economic Research (DIW Berlin) revealed that Germany's economy is showing tentative signs of emerging from a protracted slump, with gross domestic product seen inching up by 0.2% in 2025.
• Expectations that the Fed will reduce rates at the September meeting continued to trend higher. The Prime Market Terminal interest rate probability tool had priced in a 90% chance of the Fed easing policy by 25 basis points (bps) and a 10% chance for a 50 bps cut. The ECB is likely to keep rates unchanged, with a 91% probability, and only a 9% chance of a 25 bps cut.

Technical outlook: EUR/USD set to end the week above 1.1700

The EUR//USD rallied past 1.1700, hitting a five-week high of 1.1759, before retreating somewhat. Momentum shows that buyers remain in charge as depicted by the Relative Strength Index (RSI).

With that said, the next resistance for the EUR/USD would be 1.1759, ahead of 1.1800. A breach of the latter will expose the year-to-date peak at 1.1829. Conversely, a daily close beneath 1.1700 can set the tone to challenge 1.1650 ahead of 1.1600. Further losses lie below at the 100-day SMA at 1.1526.