The EUR/USD pair is trading lower today after stronger-than-expected US labor market data boosted the dollar, while a revision to Eurozone GDP figures for the first quarter painted a much weaker picture of the European economy. Eurozone GDP was revised down to -0.2% quarter-over-quarter from a previously reported 0.1% increase and against expectations for 0.1% growth. On an annual basis, GDP growth slowed sharply to just 0.3% from 0.8% previously.
Against this backdrop, the latest US labor market report came in significantly stronger than expected.
May Nonfarm Payrolls increased by 172,000, well above the consensus forecast of 89,000 and higher than the previous reading of 115,000. In addition, payroll figures for March and April were revised upward by a combined 93,000 jobs. The unemployment rate remained unchanged at 4.3%, while annual wage growth came in at 3.4% year-over-year, matching market expectations.
Following the release, the US dollar strengthened and Treasury yields moved higher, while Wall Street sentiment softened slightly on concerns that a resilient labor market could reduce the likelihood of near-term Fed rate cuts. Compared with the United States, the Eurozone economy currently appears considerably weaker, reinforcing the divergence between the two regions.
EURUSD (H1)
EUR/USD is moving lower and has fallen back toward the 1.1600 level on elevated selling volume. The pair has slipped below both the 50-period and 200-period exponential moving averages (EMA50 and EMA200), a sign that short-term momentum has turned more negative. A sustained break below 1.1600 could pave the way for a stronger bearish move. Investors will now turn their attention to next week's ECB interest rate decision, which could become the next major catalyst for the pair.
Source: xStation5
Source: XTB Research
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