empty
04.07.2025 12:48 AM
EUR/USD. What Do the June Nonfarm Payrolls Tell Us?

The U.S. labor market report published on Thursday turned out to be quite contradictory, although the market interpreted it in favor of the American currency. Looking ahead, it is worth noting that despite the optimistic reaction from traders, selling EUR/USD still appears to be a risky strategy — maintaining long positions on southern price pullbacks remains a priority. Essentially, the June Nonfarm Payrolls did not alter the context of the July FOMC meeting. The release merely confirmed that the interest rate will remain unchanged at least until September. However, the market was already fully convinced of this even before the report, following Jerome Powell's statements in the U.S. Congress and at the Sintra economic forum.

This image is no longer relevant

According to data released on Thursday, the unemployment rate in June decreased to 4.1%, down from the previous rate of 4.2%. On the one hand, this is a minimal decrease of just 0.1%. But on the other hand, unemployment had remained flat at 4.2% for three consecutive months (from March to May), and most analysts had forecast an increase to 4.3% in June — the highest since July of last year.

Another important indicator also came in "green." The number of jobs in the nonfarm sector increased by 147,000 in June, against a forecast of 120,000. Again, it's a matter of perspective. On the one hand, the figure still fell short of the 200,000 benchmark, although it did exceed expectations. On the other hand, for the third consecutive month, the figure remained roughly the same (147,000, 144,000, 147,000), reflecting the stability of the U.S. labor market.

The disappointing ADP report also played a role — it unexpectedly came in negative. Instead of the projected 100,000 gain, the actual figure was a loss of 33,000. Against such a "preview," the June NFP report appears relatively solid, although the increase in private-sector jobs (excluding government employment) did land in the red: 74,000 versus the projected 110,000.

The wage component also came in weaker. Average hourly earnings growth slowed to 3.7% y/y (most analysts had expected an increase to 3.9%). This metric has declined for two consecutive months.

Likewise, the labor force participation rate fell for the second straight month, declining in June to 62.3% — the lowest since November 2022.

Overall, the June report reflects the resilience of the U.S. labor market. Job growth is steady but at a pace consistent with the annual average (146k). This suggests the labor market is gradually slowing but not weak. The report's structure reveals that the public education and healthcare sectors are the primary drivers of growth, indicating a shift away from the private sector's strength. Wages are growing at a moderate, slowing pace, with no signs of inflationary overheating.

In other words, the Federal Reserve received a "green light" on Thursday to maintain the status quo at the July meeting. However, even without the NFP, the market was nearly certain that the Fed would keep everything unchanged this month. As for the next meeting in September, it's still too early to make forecasts. Ahead lie two more labor market reports (July and August NFP) and several inflation reports (CPI, PPI, PCE). Nevertheless, the data have somewhat weakened dovish expectations for September. For instance, on Wednesday, the probability of a rate cut in early fall stood at 95%, but it has now fallen to 70% (according to the CME FedWatch tool).

Despite the slight "recalibration" of market expectations, selling EUR/USD still looks risky. Despite a southern impulse, the bears failed to break even the intermediate support level of 1.1730 (the lower line of the Bollinger Bands on the H4 chart). At the same time, buyers quickly attempted to return to the 1.18 area, indicating weak selling pressure on EUR/USD — even though the ISM Services PMI, published a few hours after the NFP, returned to expansion territory (50.8).

The dollar remains under pressure amid fiscal and trade risks. The highly controversial tax-and-budget package ("One Big Beautiful Bill") has returned to the House of Representatives and is close to becoming law, while the "preferential tariff period" is nearing its end (July 9). This information backdrop prevents the bears from developing a sustainable downtrend, indicating that we are witnessing a correction rather than a trend reversal.

On the daily chart, the pair remains between the middle and upper lines of the Bollinger Bands and above all lines of the Ichimoku indicator (including the Kumo cloud), indicating a bullish "Parade of Lines" signal. In my view, the current situation is suitable for opening long positions with targets at 1.1790 and 1.1830 (the middle and upper lines of the Bollinger Bands on the H4 chart, respectively).

Irina Manzenko,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Irina Manzenko
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen has paused its decline against the US dollar. However, further strengthening of the yen in the near term appears unlikely. The key factors influencing

Irina Yanina 20:47 2025-07-16 UTC+2

AUD/JPY. Analysis and Forecast

On Wednesday, the AUD/JPY pair is attracting buyers, even though the Japanese yen remains relatively weak due to domestic political uncertainty. Moreover, according to polls, Japan's ruling coalition—the Liberal Democratic

Irina Yanina 13:04 2025-07-16 UTC+2

GBP/USD: Analysis and Forecast

Today, the GBP/USD pair is attempting to regain positive momentum and rise above the key psychological level of 1.3400, aiming to break a multi-day losing streak. However, spot prices remain

Irina Yanina 12:51 2025-07-16 UTC+2

The EU Needs a Deal with the US—But Not at Any Cost

The euro continues to weaken against the US dollar, even though some European politicians are no longer as soft in their statements as they once were. In an interview, Bundesbank

Jakub Novak 12:46 2025-07-16 UTC+2

Trump Prepares Tariffs on Semiconductors and Pharmaceuticals

Yesterday, the U.S. stock market declined, while the U.S. dollar strengthened further following President Donald Trump's announcement that he plans to impose tariffs on pharmaceutical products and semiconductors

Jakub Novak 12:33 2025-07-16 UTC+2

Trump's Policy Supports the Dollar (EUR/USD and GBP/USD May Resume Their Decline)

The U.S. consumer inflation report released yesterday showed that Donald Trump's policy to "make America great again" is, for now, mainly making life in America more expensive. According

Pati Gani 09:51 2025-07-16 UTC+2

The Market Failed to Hold Its Peak

Markets have started selling the news. Combined with the impact of tariffs showing up in U.S. inflation data, this prevented the S&P 500 from holding at its record high

Marek Petkovich 09:51 2025-07-16 UTC+2

U.S. Inflation Puts Pressure on the Fed

The U.S. dollar rose yesterday against a number of risk assets, despite core inflation in June rising less than expected. Inflation has been increasing for the fifth consecutive month

Jakub Novak 09:24 2025-07-16 UTC+2

What to Pay Attention to on July 16? A Breakdown of Fundamental Events for Beginners

Several macroeconomic releases are scheduled for Wednesday. The most important report is the UK inflation data, which will be published within the hour. While we do not believe this report

Paolo Greco 07:30 2025-07-16 UTC+2

GBP/USD Overview – July 16. "The Devil Is Not as Scary as He Is Painted"

The GBP/USD currency pair has been in a downtrend for the past few weeks, raising some questions. Yes, if we switch to the daily (24-hour) timeframe, the current strong downward

Paolo Greco 04:22 2025-07-16 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.