US Jobs Data and Mideast Tensions Weigh on EUR/USD
The EUR/USD pair has started the week on a subdued note, trading just above 1.1550 during the Asian session. This is well within striking distance of its highest level since June 17, which was reached in response to disappointing US jobs data on Friday.
The US Nonfarm Payrolls showed that the economy lost 23K jobs in July, missing consensus estimates of 80K by a wide margin. The previous month's reading was revised lower, showing an addition of only 20K jobs compared to the originally reported 57K. Additionally, annual wage inflation eased to 3.2% from 3.4%, offsetting a dip in the Unemployment Rate to 4.1%.
The immediate market reaction to the US jobs data was short-lived as persistent uncertainties over efforts to reopen the critical Strait of Hormuz lent some support to the safe-haven US Dollar (USD). The USD Index, which tracks the Greenback against a basket of currencies, is now looking to build on Friday's late rebound from its lowest level since June 17 and is acting as a headwind for the EUR/USD pair.
Traders seem reluctant to place directional bets and are opting to wait for further developments surrounding the Middle East crisis. Over the weekend, Iran stated that talks with Oman to establish a safe shipping route through the strategic waterway are nearing an agreement. However, Tehran cautioned that any deal would not result in an immediate reopening.
The mixed fundamental backdrop warrants some caution before positioning for an extension of the EUR/USD pair's recent strong move up from the vicinity of mid-1.1300s. Market attention now shifts to the latest US consumer inflation figures, due on Wednesday, which will provide more cues about the Fed's policy path.