Dollar Faces Crucial Test as NFP Data Approaches
The US dollar is facing a crucial test as the Nonfarm Payrolls (NFP) data approaches. The EUR/USD pair has surged after a sharp drop in the probability of the Fed tightening monetary policy in September, from 70% to 50%. This shift in expectations has weighed on the US dollar and Treasury yields.
The upcoming employment data could determine the greenback's next move. According to Bloomberg, the consensus forecast is +55,000 NFP, which is above the monthly average recorded during Donald Trump's second term. However, employment growth is running well below the pace seen under Joe Biden and remains weak by historical standards.
A stronger-than-expected US jobs report would strengthen the case for adding to short positions opened at 1.1635 on the EUR/USD. Conversely, a weak NFP reading would support buying the pair at market levels.