EUR/USD Surges to 1.1714 as Disappointing US Employment Data Weakens Dollar

SourceGate

19 Oct 2025 05:45

• The Euro strengthens following weak Nonfarm Payrolls report, showing decreased hiring, higher unemployment, and flat wage growth in August.
• US 2-year Treasury yield declines as markets fully anticipate a September rate reduction; DXY falls 0.70% to 97.57.
• Investors focus on upcoming US CPI data to confirm disinflationary trends, while EU Q2 GDP receives slight upward revision.

The EUR/USD pair advanced during North American trading hours after the latest US employment report indicated a weakening labor market. As a result, investors moved away from the US Dollar, with the Federal Reserve’s first rate cut of 2025 appearing increasingly likely. The pair is currently trading at 1.1714, representing a 0.50% increase.

Disappointing US Jobs Data Triggers Treasury Yield Decline and Dollar Selloff

The Nonfarm Payrolls (NFP) report revealed that the US economy created fewer jobs than anticipated, prompting a significant market reaction. Initially, US equities saw buying interest and rose, but concerns about a more severe economic slowdown led to a flight to safety, with Wall Street ending the session in negative territory.

Additional employment data showed a downward revision to June’s figures, an increase in the Unemployment Rate, and stagnant Average Hourly Earnings. In response to these developments, the US 2-year Treasury note yield dropped sharply as investors fully priced in a rate cut by the Federal Reserve at the upcoming September meeting.

Consequently, the Greenback experienced a substantial decline. The US Dollar Index (DXY), which measures the dollar’s performance against a basket of major currencies, has fallen by 0.70% to 97.57.

The President of the Chicago Federal Reserve stated that the September meeting is open for discussion. Meanwhile, US Treasury Secretary Scott Bessent emphasized that the Fed must reaffirm its commitment to maintaining the American public’s confidence.

Following the US jobs report, market attention now shifts to next week’s Consumer Price Index (CPI) data in the United States. Should the disinflationary process continue, it will further solidify the case for a rate cut at the September 16-17 meeting.

In Europe, Gross Domestic Product (GDP) figures for the second quarter of 2025 were revised upward on an annual basis. The quarterly economic growth remained consistent with previous estimates.

Euro Performance This Week

The following table illustrates the percentage change of the Euro (EUR) against major currencies this week. The Euro demonstrated the strongest performance against the Canadian Dollar.

This table displays percentage changes of major currencies in relation to one another. The base currency is selected from the left column, while the quote currency is chosen from the top row. For instance, selecting the Euro from the left column and moving horizontally to the US Dollar column shows the percentage change for the EUR/USD pair.

Key Market Movers: Increased Likelihood of Fed Rate Cut Boosts Euro

• EUR/USD surged after the Bureau of Labor Statistics reported only 22,000 new jobs in August, significantly below the 75,000 consensus and decelerating from July’s upwardly revised 79,000. Average Hourly Earnings grew by 0.3% month-over-month, meeting expectations, while the Unemployment Rate increased to 4.3% from 4.2%.
• In response, futures linked to the December 2025 fed funds contract priced in nearly 65 basis points of easing by year-end.
• Prior to the September Fed meeting, markets indicate a 100% probability of a 25-basis-point rate cut, and a 14% chance of a 50-basis-point reduction, based on current pricing ahead of August’s Consumer Price Index (CPI) release next week.
• The European Union’s Q2 2025 GDP remained unchanged at 0.1% quarter-over-quarter. On an annual basis, the economy expanded by 1.5%, surpassing both previous figures and estimates of 1.4%.
• Germany’s DIW Berlin (German Institute for Economic Research) reported that the country’s economy is showing early signs of recovery from a prolonged downturn, with gross domestic product projected to increase by 0.2% in 2025.
• Expectations for a Fed rate cut at the September meeting continued to rise. Gate’s interest rate probability tool indicated a 90% chance of the Fed easing policy by 25 basis points (bps) and a 10% likelihood of a 50 bps cut. The ECB is expected to maintain current rates, with a 91% probability, and only a 9% chance of a 25 bps reduction.

Technical Analysis: EUR/USD Poised to Close the Week Above 1.1700

The EUR/USD pair broke through the 1.1700 level, reaching a five-week high of 1.1759, before slightly retracing. Momentum indicators, particularly the Relative Strength Index (RSI), suggest that buyers remain in control.

Given this momentum, the next resistance level for EUR/USD is anticipated at 1.1759, followed by 1.1800. A break above this level could expose the year-to-date peak at 1.1829. On the downside, a daily close below 1.1700 might lead to a test of 1.1650, and subsequently, 1.1600. Further support lies at the 100-day Simple Moving Average, currently positioned at 1.1526.