Euro up after disappointing NFP

The Euro (EUR) maintains a strong and positive sentiment against the US Dollar (USD) in the latter part of the week, prompting EUR/USD to return to the vicinity of 1.0700 following the release of the US employment report on Friday.

Conversely, the US Dollar faces added downward pressure, leading the USD Index (DXY) to breach the 106.00 support level amid a general increase in risk tolerance. The continued weakening of the US Dollar aligns with further weakness in US yields across various time frames.

In the context of monetary policy, there is a growing agreement among market participants that the Federal Reserve (Fed) is likely to maintain its current monetary conditions unchanged. The possibility of a rate hike in December seems to have lost some traction particularly in the wake of the latest FOMC event.

The same can be said from the European Central Bank (ECB), as investors favour a protracted pause of its monetary policy, most likely until the second half of the next year.

In the euro docket, Germany’s trade surplus narrowed to €16.5 billion in September and the Unemployment Rate in the broader Eurozone ticked higher to 6.5% in the same month.

Across the pond, Nonfarm Payrolls data showed the economy added 150K jobs in October, while the Unemployment Rate ticked higher to 3.9% and Average Hourly Earnings – a proxy for wage inflation – rose 0.2% MoM and 4.1% YoY. Later in the session, the publication of ISM Services PMI will complete the weekly calendar.