A set of robust US jobs numbers yesterday prompted a hawkish , but failed to give a significant boost to the . This is – in our view – a signal of lingering strategic bearishness on the greenback, which can only be fought with more good data. We expect some stabilisation in USD crosses today
USD: Reaction to Payroll not Encouraging
There is good and bad news for the dollar after yesterday’s . The good one is intuitive: job numbers were good. declined to 4.3%, payrolls doubled the consensus at 130k, and wage growth was stronger than expected. That appears more than enough to offset the 862k payrolls revisions for 2025, especially considering the consensus was 825k.
The bad news for the dollar is that it should have rebounded more on the jobs data. Half of the initial USD rally reverted quickly, and that was not due to second thoughts on jobs figures: short-term dollar rates rose and stayed up. We instead read that as a sign markets remain minded to sell USD rallies on the back of longer-term considerations. This means the bar for a USD recovery is higher: more good data is needed, for a start.
Lower today shouldn’t be enough, and some upward surprises tomorrow are probably necessary to bring the dollar sustainable support. For today, we expect some stabilisation in around 97.0.
EUR: Eyeing Next Week’s Ukraine Talks
The support for continues to come almost entirely from strategic USD selling, with little to no contribution from the euro side. The eurozone calendar is empty today, and we don’t expect to hear anything market-moving from ECB speakers.
Yesterday, Ukrainian President Zelenskiy said next week’s discussions with the US will focus on a territorial deal. Ceasefire negotiations have moved too slowly to drive major FX implications, but next week might lead to some interesting developments. We’ll be monitoring European gas prices for any signs of ceasefire optimism: they have been under pressure since the start of February, but primarily due to expectations for milder weather.
EUR/USD may hover around 1.1850-1.1900 for today. We retain a slight preference for the downside, but a flat profile for the near term appears the most likely scenario.
Elsewhere, we have published our SEK outlook for 2026. We see short-term correction risks for the krona on the back of stretched valuation, but remain bearish on both and into year-end.
GBP: Staying Bearish After GDP Data
The UK economy ended 2025 on a lacklustre note. Though not a huge surprise, the weakness in construction and business investment is particularly eye-catching – even if the latter is partly linked to a cyberattack at a major UK car producer at the end of the third quarter.
Given we already had data for October and November, there’s not a huge amount of new information here for the Bank of England. It had already concluded that the economy ended 2025 on a weaker footing. For the Bank, next week’s jobs and inflation data will be much more instructive. So long as the recent weakness in hiring, coupled with the sharp slowdown in wage growth, continues, we expect a March cut from the BoE, followed by another move in June.
Our view remains broadly bullish on on the back of this and of our call for two BoE cuts by June: 0.88 remains a very realistic short-term target.
Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user’s means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
