The euro held near $1.1525 early Friday as the dollar firmed broadly ahead of the U.S. July nonfarm payrolls report, while sterling slipped to $1.3443 on the same dollar demand. A week after joint U.S.-Japan intervention lifted the yen, that rally appears to be fading, and ING says EUR/USD should stay range-bound until next week's inflation data.
The euro held near $1.1525, up 0.01% on the day, as the dollar firmed broadly ahead of Friday's U.S. July nonfarm payrolls report. The Dollar Spot Index edged up 0.1% to 99.97, recovering from seven-week lows touched earlier in the week. The euro also capped a flat week against the dollar.
Sterling fell to $1.3443, down 0.11% on the day, pulled lower by the same broad dollar demand rather than any domestic UK news. ING's Francesco Pesole said: "The dollar has regained a bit of ground into today's release," pointing to soured risk sentiment and an oil rebound on poor Gulf headlines.
Yen intervention momentum fades
One week after joint U.S.-Japan intervention lifted the yen as high as 155 per dollar, down from just above 163 beforehand, that rally is fading. The yen has since given up almost half of those gains, settling around 158.50 to the dollar seven days after the move was announced on July 31.
Robert Sockin, chief U.S. economist at PGIM, said he is skeptical the intervention will reverse the yen's weakening trend by itself. Market watchers are now turning their eye to domestic policy changes rather than government-backed support measures. BofA said the central banks' near-term objective is to push the yen through ¥155, a level touched only briefly before the currency drifted lower again.
Treasury Secretary Scott Bessent said market signals from intervention alone will not decide the currency's direction, arguing policy is what turns it, and adding the U.S. joined the effort because it is optimistic about Japan's policy path.
Payrolls risk and ING's EUR/USD outlook
ING's economics team expects July payrolls to rise 70,000, below the 80,000 consensus, with unemployment ticking up to 4.3% on higher participation — a scenario the bank says could soften the dollar without shifting September rate-cut pricing, which has held stable at 14 to 17 basis points since July. Separately, interest rate futures put the odds of a 25-basis-point Fed rate hike in September at 48%, so an upside payrolls surprise could revive the dollar into autumn.
Falling crude prices have also cooled Eurozone inflation anxieties, offsetting hawkish ECB commentary that continues to signal a possible rate hike in September. EUR/USD has moved an average 0.2% in the hour after nonfarm payrolls releases over the past year, with the two most recent prints producing 0.4% swings. ING's baseline keeps EUR/USD in a 1.150-to-1.155 range into next week's CPI print, while holding a one-month target of 1.16 and a year-end target of 1.18.
Sources: CNBC, Investing.com, Investing.com
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