EUR/USD traded in a tight range on Friday as stronger-than-expected US Nonfarm Payrolls (NFP) data supported the US Dollar, while the Euro stayed steady in thin Good Friday liquidity.
The pair was near 1.1534 at the time of writing, down for a second day after reaching a one-week high of 1.1627 on Wednesday. The US Dollar Index (DXY) hovered near the 100 level.
Us Jobs Data Surprises Higher
US Bureau of Labor Statistics data showed the US added 178K jobs in March versus expectations of 60K. February was revised to a loss of 133K from a previously reported decline of 92K.
The Unemployment Rate fell to 4.3% from 4.4%. Average Hourly Earnings rose 0.2% month-on-month, below the 0.3% forecast and down from 0.4% previously.
On a yearly basis, earnings grew 3.5%, below expectations of 3.7% and slower than 3.8% ранее. Markets expect the Federal Reserve to keep rates unchanged for longer.
Rate cut expectations have reduced since the US–Israel war with Iran began, as oil-related inflation risks increased. The latest jobs data supported that pricing.
Policy Divergence And Trading Implications
We are seeing a familiar pattern develop, one that echoes the market environment from this time last year. The March jobs report released today showed the US economy added a robust 255,000 jobs, crushing forecasts of 180,000 and mirroring the surprise strength we analyzed in March of 2025. The unemployment rate also unexpectedly ticked down to 3.8%, signaling persistent tightness in the labor market.
This kind of strength, particularly with average hourly earnings now climbing at a 4.1% annual pace, reinforces the Federal Reserve’s “higher for longer” stance. Just as we saw last year, resilient economic data gives the Fed justification to hold interest rates steady to combat any lingering inflation. Consequently, fed funds futures markets have now priced out nearly all possibility of a rate cut before the third quarter.
The situation contrasts sharply with Europe, where recent Eurozone CPI data for March showed headline inflation cooling further to 2.3%. This growing policy divergence, with the European Central Bank signaling a greater willingness to ease policy, continues to weigh on the EUR/USD pair. The interest rate differential between the US and Germany is widening in the dollar’s favor, a key driver for the currency market.
For derivative traders, this suggests a strategy of positioning for continued downside in the EUR/USD. We believe buying put options on the Euro, or constructing bearish risk reversals, offers a clear way to express this view over the next several weeks. These trades can capitalize on a potential slide towards the 1.0600 support level, especially if upcoming US inflation data also comes in hot.
Looking back, we saw how powerful this dynamic was during the 2022-2023 period when aggressive Fed tightening drove the US Dollar index well above 110. That period demonstrated how a determined Fed, backed by strong domestic data, can create a sustained trend against currencies with more dovish central banks. History suggests that fighting the Fed in these conditions is a low-probability trade.
