Euro Holds Steady; NFP to Determine Next Direction

EUR/USD traded steadily around 1.1625 during early Asian trading on Friday (September 4). Market participants are holding off on new positions while awaiting the U.S. employment report, which could determine the direction of the dollar and Federal Reserve policy.

Fed Governor Christopher Waller stated he is inclined to support keeping interest rates unchanged at the September meeting, provided upcoming inflation data holds no surprises. This statement lowered the probability of a rate hike to approximately 50.2%, down from 63.2% the previous day.

The market anticipates the U.S. economy added 56,000 jobs in August, with the unemployment rate remaining at 4.1%. Stronger-than-expected labor data could revive bets on a rate hike, bolstering the U.S. dollar and putting downward pressure on EUR/USD.

In Europe, the euro is finding support from expectations that the European Central Bank (ECB) will raise interest rates again in September. If realized, this move would mark the second—and likely final—hike in the ECB's current tightening cycle.

Disappointing NFP figures could push EUR/USD higher, testing levels above 1.1625. Conversely, strong data could reignite dollar strength and drive the pair back below 1.1600.