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The EUR/USD pair loses ground to around 1.1905, snapping the two-day winning streak during the early European trading hours on Tuesday. Markets might turn cautious ahead of the release of key US economic data, including US employment and inflation reports that were pushed back slightly due to the recently ended four-day government shutdown.
White House economic adviser Kevin Hassett said on Monday that US job growth might stall in the coming months due to slower labor force growth and higher productivity.
The Nonfarm Payrolls (NFP) report, which is due on Wednesday, is projected to show an increase of 70,000 jobs in January, while the Unemployment Rate is estimated to hold steady at 4.4% during the same period. In case of weaker-than-expected outcomes, this could weigh on the Greenback and act as a tailwind for the major pair. On the other hand, any signs of improvement in the US labor market could underpin the USD against the Euro.
Across the pond, the European Central Bank (ECB) held its benchmark interest rate at 2.0% for the fifth meeting in a row last week, as widely expected. During the press conference, ECB President Christine Lagarde said that the central bank would maintain its data-dependent and “meeting-by-meeting approach” and would not be “precommitting to a particular rate path.”
Around 85% of economists surveyed by Reuters in their January poll said the ECB would keep the interest rates steady over the rest of 2026.
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