EUR/USD: Focus shifts toward cyclical US growth – Danske Bank

EUR/USD has stabilized in the 1.08-1.09 range after a highly volatile week, marking its biggest jump since 2009 following a regime shift in euro area fiscal policy, Danske Bank's FX analysts Kristoffer Kjær Lomholt and Filip Andersson report. 

EUR/USD has stabilized in the 1.08-1.09 range

"Friday's February US jobs report had a limited market impact, with NFP slightly below consensus at 151K (cons.: 160K, prior: 125K), while the unemployment rate edged up to 4.1% (cons.: 4.0%, prior: 4.0%). Average hourly earnings moderated to 0.3% m/m, in line with expectations, down from 0.5% in January." 

"Fed pricing remains steady, with three full 25bp cuts priced for the year and the first cut expected in June, in line with our forecast. This week is light on data, with key focus on Wednesday's US February CPI release and Friday's Michigan consumer sentiment survey for March." 

"We see the broad USD remaining fragile, with the DXY index posting its largest weekly decline since November 2022. Long dollar positioning is likely being unwound as focus shifts toward cyclical US growth rather than tariff developments. We maintain a bullish EUR/USD stance on a tactical basis."