EUR/USD slides further to near 1.1500 ahead of US NFP data

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The EUR/USD pair extends its losing streak for the fifth trading day on Thursday. The major currency pair slides to near an almost two-week low around 1.1500 during the European trading session.

EUR/USD falls further to near 1.1500 as the US Dollar strengthens amid receding Fed dovish speculation.
Many FOMC policymakers believe that further interest rate cuts could boost inflation expectations.
Investors await US NFP data for September, and Eurozone/US flash private PMI data for November.

The EUR/USD pair extends its losing streak for the fifth trading day on Thursday. The major currency pair slides to near an almost two-week low around 1.1500 during the European trading session. The weakness in the pair is mainly contributed by the strength in the US Dollar (USD), which outperforms its peers amid receding expectations of an interest rate cut by the Federal Reserve (Fed) in its upcoming monetary policy meeting in December.

During the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near an over five-month high of around 100.30.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has diminished to 32.8% from 50.1% seen on Tuesday.

Traders pare Fed dovish bets after the release of the Federal Open Market Committee (FOMC) minutes of the October policy meeting on Wednesday, which showed that many policymakers supported holding interest rates steady in the December meeting, citing that further monetary policy easing could entrench consumer inflation expectations.

For more cues on the monetary policy outlook, investors await the United States (US) Nonfarm Payrolls (NFP) data for September, which will be published at 13:30 GMT. The US NFP data will significantly influence expectations for the Fed’s interest rate outlook as many officials have been warning of downside labour market risks.

Meanwhile, the Euro (EUR) is under pressure as receding Fed dovish expectations have weakened the risk appetite of investors.

Going forward, the Euro will be influenced by the preliminary HCOB Purchasing Managers’ Index (PMI) data for November, which will be released on Friday.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.