Euro Trades Near 1.1455 as Softer US Jobs Data Weighs on the US Dollar While ECB Maintains a Balanced Policy Outlook

The euro strengthened modestly against the US dollar during Friday's European session, with EUR/USD trading near 1.1455, while the US Dollar Index (DXY) eased to around 100.70. The move followed broader US dollar weakness after Thursday's weaker-than-expected US employment data.

Softer US Employment Data Reshapes Fed Expectations

The June Nonfarm Payrolls (NFP) report showed the US economy added 57,000 jobs, below the market consensus of approximately 110,000. In addition, May's employment figure was revised lower from 172,000 to 129,000.

Following the release, market participants reduced expectations for additional Federal Reserve policy tightening. According to the CME FedWatch Tool, the implied probability of a Federal Reserve rate increase by September declined to approximately 53.2%, compared with nearly 64% two days earlier.

Market attention is now shifting toward the release of the June ISM Services PMI, which may provide additional insight into the strength of US economic activity.

ECB Continues to Emphasize a Balanced Policy Assessment

Speaking at the ECB Forum on Central Banking, European Central Bank (ECB) President Christine Lagarde said that second-round inflation effects had "yet to materialize" while noting that risks to inflation and economic growth had become more balanced than several weeks earlier. She also stated that the euro area was not experiencing stagflation.

According to FXStreet's Speechtracker, Lagarde's remarks were assessed as slightly more hawkish than her historical average, reflecting market interpretation of her overall tone.

Separately, Pierre Wunsch, Governor of the National Bank of Belgium and an ECB Governing Council member, said he did not currently see a case for additional monetary tightening unless second-round inflation effects were to emerge, according to Econostream.

Market Focus Remains on Incoming Economic Data

Recent comments from ECB officials have highlighted a more balanced assessment of inflation risks while maintaining the central bank's commitment to price stability.

At the same time, with no major monetary policy decisions expected in the immediate term, upcoming economic data may continue to influence market expectations regarding both the ECB and the Federal Reserve.

Why It Matters for Southeast Asian Traders

The US dollar weakened broadly during Friday's trading session, reflecting changing expectations for Federal Reserve policy following the latest US employment report.

For market participants in Southeast Asia, the upcoming US ISM Services PMI may provide additional information about the US economic outlook and could influence sentiment across major currency markets, including EUR/USD and regional currencies.

Market data were sourced from the CME FedWatch Tool, FXStreet, and Trading Economics. This content is provided for informational purposes only and does not constitute investment advice.