US Jobs Report Dampens Rate Hike Expectations, Boosts EUR/USD

The recent US jobs report showed a decline in employment, reducing expectations for a Federal Reserve rate hike in September. The report revealed that the economy lost 23,000 jobs in July, with downward revisions to previous months' data. Despite the unemployment rate falling to 4.1%, the number of people in the labor force decreased, and participation rates dropped to their lowest level in over five years.

The weak job market data led to a decrease in the probability of a September rate hike from 55% to 44%. Treasury yields also declined after the report, with the two-year yield dropping to approximately 4.20% and the 10-year yield falling to around 4.65%. The Federal Reserve is likely to keep interest rates at current levels in September, but the upcoming inflation data will provide more insight into their decision.

The European Central Bank's (ECB) policy expectations are also influencing the EUR/USD exchange rate. The ECB's deposit rate remains unchanged at 2.25%, and there is still a high chance of another rate hike in September. This adjustment may help reduce the interest rate spread between the US and the eurozone, which could boost the EUR/USD.

The EUR/USD pair maintains its bullish structure above 1.1360, with strong support at this level. However, the short-term outlook for EUR/USD shows strength above the 50-day Simple Moving Average (SMA), but resistance is around 1.1626. A break above this level could introduce another rally towards 1.192.