EUR/USD slipped below 1.1900 on Wednesday as the US dollar rebounded after the US Nonfarm Payrolls report. The pair traded at 1.1885, down 0.07%, after hitting a daily low of 1.1833.
US payrolls rose by 130K in January. Private hiring increased by 172K, while government payrolls fell by 42K. The unemployment rate dropped to 4.3%, below the Fed’s 2026 estimate of 4.5%.
Labor Market Revisions And Rate Expectations
Annual revisions showed earlier job gains were overstated. The March 2025 level was revised down by 898K, and estimated 2025 job growth was cut to 181K from 584K.
Rate expectations shifted after the report. Market pricing now implies about a 95% chance of no March cut, based on Prime Market Terminal data. CBOT data showed money markets pricing nearly 51 basis points of easing by year-end.
Kansas City Fed President Jeffrey Schmid said inflation remains too high and warned that more cuts could keep inflation elevated for longer. In Europe, there were no major releases. ECB officials said inflation is under control, and added that the euro’s strength has already been factored in.
Next, the Eurozone calendar includes speeches from Mario Cipollone, Philip Lane, and Joachim Nagel. The US schedule includes jobless claims for the week ending 7 February, housing data, and speeches from Lorie Logan and Stephen Miran.
Trading Focus And Key Levels
Markets are focused on the stronger headline jobs number and the Fed’s firm stance. Together, these have pushed expected rate cuts further out. Bets on a March 2025 cut have almost disappeared, with futures pricing only a 5% chance. This reaction makes sense. January inflation data showed core prices still above 3%, giving policymakers little reason to ease.
Still, the large downward revision to past job growth is hard to ignore. Nearly 900,000 previously reported jobs from 2024 were removed. In early 2024, a similar (but smaller) revision of more than 300,000 jobs pointed to cooling that markets initially missed. This suggests the labor market may be weaker than the latest headline number indicates.
The gap between strong current data and weaker historical revisions adds uncertainty. For derivatives traders, that can create opportunity. Buying EUR/USD volatility could be attractive in the coming weeks. Options markets may not fully reflect the risk that investors have overestimated the economy’s true strength, which could lead to larger price swings.
For direction, we lean toward a weaker dollar once the market focus shifts from one jobs report to the broader trend. A sustained move above resistance at 1.1916 could trigger long positions, with 1.2000 as the next key target. Upcoming Initial Jobless Claims will matter. A reading above the recent average near 220,000 could speed up this repricing.
On the downside, a break below trend-line support near 1.1818 would weaken this view for now. It would suggest markets are still committed to the hawkish Fed narrative, despite signs of softening. In that case, we would reassess and look for support closer to 1.1750.
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