The EUR/USD currency pair held steady at 1.0900 on Friday following the release of mixed US jobs data. The euro (EUR) has had a decent week, with gains of 0.61%, but it failed to reclaim the 1.1000 level.
The US Department of Labor released March’s job report, which showed that payrolls rose by 236K, slightly below the expected 240K. Despite this, the data insights sparked a jump in the odds of a US Federal Reserve (Fed) 25 bps rate hike. The participation rate surged to 62.6%, while the unemployment rate remained unchanged at 3.6% YoY. The average hourly earnings fell to 4.2% on an annual basis, which is below the consensus.
As a result, US Treasury bond yields extended their gains, with the 2-year US T-bond yield, the most sensitive to interest rates, climbing 16 basis points. The Fed swaps are repricing the May monetary policy meeting, and the odds of a 25 bps rate hike by the US Federal Reserve rose to 67.0%.
While the European Union (EU) economic docket was absent, Klas Knot, an ECB Governing Council Member, made a statement. Knot commented that the ECB is not done with interest rate hikes, as core inflation remains at 6%, three times higher than the ECB’s 2% target.
What This Means for EUR/USD Traders
The mixed US jobs data and the ECB’s comments have caused the EUR/USD to remain stable, and traders should pay attention to these factors in the coming weeks. Although the US nonfarm payrolls report was slightly below expectations, the odds of a US Federal Reserve rate hike increased, causing US Treasury bond yields to rise. The ECB’s commitment to its interest rate hikes could also influence the EUR/USD.
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