The euro against the dollar sees a drop, hovering around 1.1860 in the early hours of the European session on Thursday. The favorable US jobs report tempers predictions for further Fed rate reductions, strengthening the US Dollar. The ECB is expected to maintain consistent rates through 2026, following its data-focused approach. The EUR/USD pair is on a downward trend for the third consecutive day, currently sitting around 1.1860 in the early European session on Thursday. Market participants will keep a close eye on the upcoming US weekly Initial Jobless Claims data. On Friday, attention will shift to the US Consumer Price Index inflation report.
The US dollar gains ground against the Euro as traders recalibrate their strategies in response to favorable US employment figures, leading to diminished anticipation for a rate cut by the Federal Reserve in March. The Bureau of Labor Statistics disclosed on Wednesday that the US Nonfarm Payrolls increased by 130,000 in January, surpassing the anticipated figure of 70,000. The Unemployment Rate fell to 4.3% in January, a decline from 4.4% in December, exceeding the anticipated figure of 4.4%.
The CME FedWatch tool shows that financial markets now assign a nearly 94% probability to the Fed keeping rates steady at its upcoming meeting, up from the 80% noted the previous day. The growing agreement on the European Central Bank’s likely choice to keep interest rates steady for the rest of the year could enhance the value of the shared currency.
During the conference, ECB President Christine Lagarde stated that the central bank will uphold its data-driven and “meeting-by-meeting approach” and will refrain from “precommitting to a specific rate path.” About 85% of economists indicated that the ECB is anticipated to keep the current interest rates steady for the rest of 2026.