The single European currency has remained near the 1.1050 level for the fourth consecutive day, trading within a narrow range on either side.
After suffering significant losses two weeks ago, the US dollar has returned to the spotlight, with the Euro previously climbing to 1.12, one of its highest levels in 13 months.
A key factor driving the Euro higher was the contraction in the US labor sector, which weighed on the dollar. As a result, this week’s labor figures—including today’s and tomorrow’s preliminary data, as well as the highly anticipated non-farm payrolls and US unemployment rate set to be released on Friday—are being closely watched. These data releases could trigger significant market movements.
Yesterday’s data showed a slight uptick in the US manufacturing index, though it still fell short of expectations, and this did not significantly impact the exchange rate.
Despite significant pressure on international stock markets, with the benchmark S&P 500 index recording notable losses yesterday, the US dollar—traditionally viewed as a safe haven currency—has not yet strengthened.
This situation underscores the market’s focus on the potential for a Fed rate cut at its September 18 meeting, with this week’s labor data likely determining whether the cut will be 25 or 50 basis points.
The US dollar appears to have room for further gains and may soon challenge the 1.10 level. However, it might be wise to remain cautious ahead of the critical US jobs data.
The Euro’s exchange rate is expected to stay close to the 1.1050 level today, with potential fluctuations on either side of that mark.
