Euro Erases Weekly Gains as Optimistic US Jobs Data Boosts Dollar

The euro traded significantly lower against the dollar on Friday, giving back all of the gains recorded earlier in the week. The trigger was stronger-than-expected US nonfarm payrolls data, which fueled a noticeable uptick in demand for the dollar and pushed the euro lower. At the time of writing, the pair was trading near 1.11343, down approximately 0.77% on the day.

**Jobs Data Acts as Short-Term Booster for Dollar**

The resilience shown by the US labor market provided key support for the dollar. Market analysts suggest that if nonfarm payrolls come in significantly positive—for instance, above the 80,000 level—it could support the dollar in the immediate reaction following the release and lead to a pullback lower in EUR/USD. Analysts at ING also noted that the resilience of the US economy and the possibility that the Federal Reserve may continue tightening monetary policy limit the scope for further near-term dollar weakness. However, investors may remain cautious ahead of next week's key US inflation data, which could cap the sustained boost from the jobs report.

**Euro Under Technical Pressure, Rally Meets Resistance**

From a technical standpoint, EUR/USD encountered notable selling pressure before challenging higher resistance levels. FXStreet analyst Eren Sengezer had earlier noted that the pair was striving to complete a bullish reversal, but the Relative Strength Index on the daily chart remained slightly below 50, indicating a lack of upward momentum. On the upside, the 1.1350 level constitutes initial resistance, while the first support level to the downside could be near 1.1130. Friday's decline brought the pair directly toward that support zone; if it breaks, the 1.1000 psychological level could come into play.

**Market Focus Shifts to Future Policy Path**

Although the jobs data dominated market moves in the short term, the debate over the Federal Reserve's future policy path is far from over. According to the CME FedWatch Tool, market expectations for a rate hike at the Fed's next meeting have recently hovered around 20%. Some analysts warn that if the US political environment generates greater disagreement over policies such as deregulation and AI infrastructure buildout, the dollar could see more weakness by 2027. This implies that the battle around EUR/USD will continue to closely track shifts in economic data and policy expectations.