Forex analytics. The dollar played on emotions – ForexNews.PRO
Fear has big eyes. When investors saw the rise in unemployment in the United States to a four-year peak of 4.6% and a decrease in October employment by 105 thousand, they rushed to sell the US dollar. The markets fired as usual and only then began to sort things out. EURUSD touched 1.18 for the first time since the end of September, but then fell like a stone. Despite the sad statistics, at first glance, the Fed is unlikely to lower the federal funds rate until March.
The October failure is related to the delayed effect of federal employee layoffs. Without him, employment increased by 52 thousand. Its average monthly growth in autumn accelerated to 75 thousand from the summer +13 thousand. The rise in unemployment to 4.6% is an alarming signal, but this figure is approximately in line with the FOMC forecast for the end of 2025.
The Fed will not force things. The futures market has not changed its readings. He continues to assess the chances of a federal funds rate cut in January as 1 in 4, in March as 1 in 2. Derivatives predict two acts of monetary expansion in 2026, the same as it was before the BLS employment report for October-November. Unsurprisingly, after the initial rise, the EURUSD returned to its original positions.
Traders turned their attention to the fact that due to the statistics on the US labor market, it remained in the shadows. On business activity data. Which slowed down on both sides of the Atlantic in December. The negative effect of tariffs and trade uncertainty was cited as the main reason. Washington has threatened the EU with new import duties if it continues to put sticks in the wheels of American companies. Recently, Brussels imposed a fine of $140 million on the social network owned by Elon Musk X.
There was an alarming signal in the US PMI data – the measure of input costs grew at the fastest pace since November 2022. Corporations in the United States are absorbing tariffs, which will eventually lead to an acceleration of inflation. The economy may not slow down thanks to the big and beautiful tax cut law, but rising prices will be a strong argument in favor of a long pause by the Fed in the cycle of monetary expansion.
As a result, narratives from a year ago may return to the market. At that time, it was believed that the eurozone economy would suffer more from tariffs than its American counterpart, and an increase in inflation would force the Fed to keep rates at a high level. This combination gives grounds to sell the euro against the US dollar.
