The US dollar's strong rebound suppresses the euro, and non-farm payroll data awaits to set the market on edge.

The US Economic Calendar is Packed, Market Sentiment Volatility Intensifies

This week, the US government is releasing a series of major economic data, with the non-farm payroll report scheduled for Thursday, and Nvidia's earnings also due on Wednesday. These two events are becoming the market's focus. Safe-haven funds are flowing into the US dollar, mainly due to rising concerns over the artificial intelligence bubble. Meanwhile, statements from Federal Reserve officials send mixed signals—Vice Chair Jefferson adopts a dovish stance, believing that inflation risks may have diminished, while Governor Waller leans toward a December rate cut. The conflicting voices make it difficult for the market to interpret the outlook.

Against this backdrop, EUR/USD faced pressure during North American trading hours, falling 0.30% intraday and ultimately closing near 1.1589, well below the early high of 1.1624. The US Dollar Index (DXY) rose 0.20% to 99.47, reflecting a broad strengthening of the dollar against six major currencies.

Market Expectations Shift, Rate Cut Probabilities Diverge

The latest manufacturing survey from the New York Fed reveals subtle changes in economic outlook. Current business conditions exceeded expectations, with improvements in new orders and hiring, and a decline in input prices. However, the six-month outlook index plummeted from 30.3 to 19.1, indicating a significant decline in business optimism about the future. This contradictory data set leaves the market in a dilemma—while the economy is currently resilient, prospects are worrying.

Expectations in the currency markets have quietly adjusted. According to CME FedWatch data, the probability of the Federal Reserve holding rates steady at the December meeting has risen to 57%, while the chance of a 25 bps rate cut has fallen to 43%. This suggests that market confidence in the Fed's easing cycle has wavered, providing support for the dollar.

European Central Bank Maintains Optimism, but Risks Cannot Be Ignored

ECB Vice President de Guindos stated that inflation in the eurozone is converging toward the 2% target, which is a positive signal. However, he also warned that rising tariffs and high sovereign debt levels pose hidden risks. If market sentiment reverses, these factors could trigger a chain reaction. In contrast, Fed officials' language is more cautious; Vice Chair Jefferson noted that companies remain cautious about hiring and layoffs, and the current monetary policy environment is described as "somewhat restrictive."

Technical Outlook Urgent, 1.1550 Becomes a Key Break Level

The technical picture for EUR/USD indicates a bearish dominance. The price continues to hover around the 50-day simple moving average (1.1581), with RSI showing a U-shaped reversal, and downward pressure gradually increasing. A break below 1.1550 would put the 1.1500 level directly at risk.

For the bulls to regain control, they must effectively reclaim the 1.1600 level, which is essential to restore confidence. If successful, the next target is above the 50-day moving average at 1.1656, followed by the 100-day moving average at 1.1659. Further up, 1.1700 acts as a short-term resistance top.

This week’s US non-farm payroll data will be a decisive factor, as the market awaits whether this report can sustain dollar support or cause its momentum to fade.