EUR/USD bounces after NFP misfire pummels Greenback

• EUR/USD bumps back over 1.0900 after bad US NFP print.
• Broad-market concerns of a US slowdown jumped on Friday.
• Coming up next week: US ISM Manufacturing PMI, EU Retail Sales

EUR/USD caught a ride higher on Friday after the Greenback got pummeled following a bad data beat in US Nonfarm Payroll (NFP) figures. Market fears of an accelerating economic slowdown in the US sparked a firm risk-off bid throughout global markets, but with US data going too far into the red too fast, the US Dollar got caught up in the stampede and tumbled across the board.

Forecasting the Coming Week: Focus remains on data and rate cut bets

The latest US NFP labor data revealed that the US added 114K net new jobs in July, falling short of the expected 175K. Additionally, the previous month's figure was revised down to 179K from the initial 206K. The US Unemployment Rate also increased to 4.3%, the highest level since November 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4% as employed individuals faced challenges in securing jobs with sufficient hours.

Average Hourly Earnings growth slowed to 0.2% month-over-month, below the anticipated 0.3%, and the year-over-year wages growth decreased to 3.6% from the previous 3.8%.

Friday’s US NFP labor data dump showed the US added 114K net new jobs in July, well below the forecast 175K and the previous month’s figure was revised to 179K from the initial print of 206K. The US Unemployment Rate also ticked higher to 4.3%, the highest reading since November of 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4% as employed people struggle to find jobs that provide enough hours.

Average Hourly Earnings growth also eased to 0.2% MoM from the expected hold at 0.3%, with YoY wages growth cooling to 3.6% from the previous 3.8%.

With US economic data turning broadly sour, investors extended a two-day decline on growing fears of a broad recession within the domestic US economy, sparking a flight out of risk assets and sending equity indexes broadly lower. According to the CME’s FedWatch Tool, rate traders have fully priced in a rate cut in September, with 70% odds of a double-cut for 50 basis points when the Fed gives its rate call on September 18.

Coming up next week, the US will see July’s ISM Manufacturing Purchasing Managers Index (PMI) Figures on Monday, which is forecast to increase to 51.0 MoM and cross back over into expansion territory compared to June’s contractionary 48.8. Pan-European Retail Sales for the year ended in June are slated for early Tuesday, and median market forecasts expect a slight cooling to 0.2% from the previous 0.3%.

EUR/USD technical outlook

The Fiber’s Friday breakout shot EUR/USD back out the top end of a sloppy descending channel on daily candlesticks, bit price action still has ground to cover before recovering enough ground to make another attempt at cracking through 1.0950.

If bidders are able to extend momentum, EUR/USD is on pace to bake in a technical rejection from the 200-day Exponential Moving Average (EMA) at 1.0802, while sellers will be looking to push bids back down into a short side move back towards the last swing low below 1.0700.

EUR/USD daily chart