EUR/USD faced renewed selling pressure on Wednesday after a stronger-than-expected US Nonfarm Payrolls (NFP) report boosted the US Dollar and dented demand for the Euro. The pair dropped sharply in the immediate aftermath of the release, falling around 68 pips to an intraday low near 1.1833 before stabilizing around 1.1875 at the time of writing.

January’s NFP report showed that the US economy added 130K jobs, comfortably exceeding market expectations of roughly 70K and improving on December’s revised 48K gain. Meanwhile, the Unemployment Rate ticked lower to 4.3% from 4.4%, signaling continued resilience in the labor market.

However, the details beneath the headline figures painted a more nuanced picture. The Bureau of Labor Statistics (BLS) revised down the seasonally adjusted level of total Nonfarm employment for March 2025 by 898K. In addition, total job growth for 2025 was sharply reduced to 181K from a previously reported 584K, suggesting that underlying hiring momentum last year was significantly weaker than earlier believed. The BLS also indicated that average monthly job growth in 2025 stood at just 15K, underscoring a subdued longer-term trend.

On the wage front, Average Hourly Earnings rose by 0.4% month-on-month in January, accelerating from 0.1% previously and surpassing the 0.3% consensus forecast. On an annual basis, wage growth held steady at 3.7%, slightly above expectations of 3.6%. The stronger earnings data reinforced the view that inflationary pressures from wages remain persistent.

Overall, the report dampened expectations for near-term Federal Reserve rate cuts and strengthened the argument for policymakers to maintain current rates for longer. According to the CME FedWatch Tool, futures markets now largely price the policy rate to remain unchanged within the 3.50%–3.75% range at both the March and April meetings.

Meanwhile, the US Dollar Index (DXY) trades broadly flat near 96.95, after earlier dipping to around 96.49 before rebounding on the jobs data. For now, EUR/USD remains sensitive to shifts in Fed rate expectations, with the strong headline labor figures providing fresh support for the Greenback despite downward revisions to past employment trends.

Trade Idea:
Sell EUR/USD on rallies toward 1.1900–1.1920, targeting 1.1780, with a stop above 1.1970, as strong US payrolls and firm wages support the Dollar.