EUR/USD Retreats from Highs Ahead of US Nonfarm Payrolls Release
The Euro (EUR) has retraced most of its daily gains against the US Dollar (USD), trading near 1.1900 at the time of writing on Wednesday after being rejected from February's highs at 1.1925. Despite this, the pair remains 1.1% above last week's lows, as downbeat US data has sparked fresh concerns about the economic outlook. The focus has shifted to the release of January's delayed Nonfarm Payrolls (NFP) report.
US Retail Sales remained flat in December, contrary to expectations, suggesting that consumption, which accounts for nearly 70% of GDP, will have a weaker contribution to US growth in the last quarter of 2025. Labour costs also slowed down in the fourth quarter, indicating a steadier labour market and providing further reasons for the US Federal Reserve (Fed) to ease its monetary policy.
The economic calendar is thin during Wednesday's European session, with all eyes on the US Nonfarm Payrolls Report due later in the day. Later, Kansas City Fed President Jeffrey Schmid, the Fed's Vice Chair for Supervision Michelle Bowman, and Cleveland Fed President Beth Hammack will take the stage. European Central Bank (ECB) committee member Isabel Schnabel is also expected to meet the press during the US trading session.
The table below shows the percentage change of Euro (EUR) against listed major currencies today. The Euro was the strongest against the Canadian Dollar.
USD EUR GBP JPY CAD AUD NZD CHF
USD -0.05% -0.29% -0.49% 0.00% -0.52% -0.24% -0.07%
EUR 0.05% -0.23% -0.48% 0.05% -0.47% -0.18% 0.00%
GBP 0.29% 0.23% -0.25% 0.29% -0.24% 0.04% 0.24%
JPY 0.49% 0.48% 0.25% 0.51% -0.02% 0.27% 0.47%
CAD 0.00% -0.05% -0.29% -0.51% -0.52% -0.24% -0.05%
AUD 0.52% 0.47% 0.24% 0.02% 0.52% 0.29% 0.48%
NZD 0.24% 0.18% -0.04% -0.27% 0.24% -0.29% 0.19%
CHF 0.07% -0.00% -0.24% -0.47% 0.05% -0.48% -0.19%
The heat map represents percentage changes of major currencies against each other, with the base currency on the left and the quote currency on top. For instance, EUR/USD represents the percentage change of the Euro against the US Dollar.
Daily Digest: Soft Data Keeps the US Dollar on the Defensive
- US consumption data added pressure to an already soft US Dollar on Tuesday. Retail Sales remained flat in December, contrary to expectations of 0.4% growth and following a 0.6% increase in November. The Retail Sales Control Group, or 'core' Retail Sales, contracted by 0.1%, with November's reading revised down to 0.2% growth from the previous 0.4% estimation.
- Also on Tuesday, data from the Bureau of Labor Statistics (BLS) revealed that the US Employment Cost Index slowed to 0.7% in Q4 from 0.8% in the previous quarter, with the annual rate growing at its slowest pace since 2021.
- Recent US data has endorsed the dovish side of the Federal Reserve's committee, prompting investors to increase their bets on monetary easing in 2026. Futures markets are pricing nearly 75% chances of a rate cut in June and between two and three cuts before December, according to the CME Fedwatch tool, compared to the quarter-point monetary easing projected by the Fed.
- Later on Wednesday, US NFP data is expected to show a 70K increase in payrolls in January, up from the 50K net jobs created in December. The Unemployment Rate is forecast to remain steady at 4.4%, and wages are expected to have slowed to a 3.6% yearly growth, from 3.8% in December.
- On Monday, the White House economic adviser Kevin Hassett affirmed that job growth will remain slow in the coming months due to President Trump's migration policies and a sharp increase in productivity, which has dampened expectations for a bright NFP report.
Technical Analysis: EUR/USD Recovery Stalls Below 1.1925
The 4-hour chart shows EUR/USD trading sideways between the 38.2% and 50% Fibonacci retracements of the late January selloff. The immediate bias remains positive, although technical indicators highlight a softer momentum.
The Moving Average Convergence Divergence (MACD) is in positive territory, but the MACD line is poised to cross below the signal line, indicating a bearish move. The Relative Strength Index (RSI), however, stands above 60, showing moderate bullish strength.
The 50% Fibonacci level and Monday's high at 1.1925 are closing in on the January 30 high near 1.1975. On the downside, the 38.2% Fibonacci retracement aligns with session lows around 1.1885. A confirmation below this level would add pressure towards Monday's low near 1.1815.
The Nonfarm Payrolls release is a critical economic indicator, presenting 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. Monthly changes in payrolls can be highly volatile, and the number is subject to strong reviews, which can trigger volatility in the Forex market. A high reading is generally bullish for the US Dollar, while a low reading is bearish, though previous months' reviews and the Unemployment Rate are also relevant.
The market's reaction depends on the overall assessment of the BLS report. 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 economy's overall performance and is monitored by policymakers. Full employment is a Federal Reserve mandate, and they consider labour market developments when setting policies, impacting currencies. Despite leading indicators, Nonfarm Payrolls often surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD-bullish.
