The Euro surged against the US Dollar after a disappointing jobs report in July. The Euro rose nearly 150 pips, trading at about 1.1556, which is a 1.20% increase for the day, following earlier lows. The US Dollar Index fell to 99.3 from a two-month high of 100.26. The Nonfarm Payrolls report showed only 73,000 new jobs in July, much lower than the expected 110,000. June’s numbers were also revised down, dropping from 147,000 to 14,000. The Unemployment Rate went up to 4.2%. Wage growth remained steady. Average Hourly Earnings increased by 0.3% from the previous month and by 3.9% from a year ago. This was slightly above the forecast of 3.8% and in line with past levels. Market expectations for a rate cut in September jumped to 67.1%, up from 37%. Recent comments from Fed Chair Jerome Powell might cool those hopes. Now, attention shifts to the July ISM Manufacturing PMI, expected to decrease to 49.5 from 49.0. Given the strong market reaction to the jobs data, we expect increased volatility in the coming weeks. We should think about strategies that benefit from large price movements, like buying options straddles on the EUR/USD pair. This will allow us to gain whether the Euro climbs further or drops back down due to new information. For those who want to take a position, there’s a clear opportunity to bet against the US Dollar. Purchasing call options on the EUR/USD offers potential gains with limited risk, which is smart given the current uncertainty. This perspective is backed by recent comments from European Central Bank officials in July 2025, who seem more inclined to keep interest rates stable, differing from the Fed’s approach. We’re looking at past patterns for insight, and this situation feels similar to what we saw in 2025. In the spring of 2024, disappointing US economic reports led to a significant shift from the Federal Reserve, causing the dollar to weaken against other major currencies for several months. According to the latest Commitment of Traders report from late July 2025, large speculators were already cutting back on their long positions in the US Dollar, indicating we are in line with institutional trends. The EUR/USD breaking above the 1.1500 level is a key moment, as this level served as major resistance in the second quarter of 2025. We now see it as a potential support level for the pair. For those with long positions in the dollar, it’s important to protect against further declines. Buying put options on the US Dollar Index can secure profits and minimize losses ahead of the September Fed meeting. Everyone is watching the upcoming ISM Manufacturing data closely, which will either confirm the new economic weakness or trigger a strong rebound in the dollar.

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