Euro holds ground awaiting NFP

The Euro is heading towards the 1.10 level as we get ready to enter the European session today after The European Central Bank (ECB) decided to leave its monetary policy unchanged yesterday with market participants predicting no changes in rates at least until spring. The attention will now shift to the all-important US Nonfarm Payrolls (NFP) on Friday which is likely to dictate when the US Federal reserve will also move on rates

On Thursday, the ECB kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 4.5%, 4.75%, and 4.0%, respectively. The central bank said it will keep policy appropriately restrictive for as long as necessary to bring inflation down to the ECB’s target. However, a first rate cut at the June meeting is probable if the evidence of inflation continues to improve.

In a monetary speech yesterday, Fed Chair Jerome Powell noted that interest rate cuts may not be too far off in the distant future. However, Powell emphasized that the timing and scale of rate cuts will depend on data. Investors anticipate the first cut to come in June, with four reductions totalling a full percentage point by the end of 2024.

Investors will closely watch the US February labor market report on Friday, including US Nonfarm-Payrolls, Unemployment Rate, and Average Hourly Earnings. The labor market data for February will be a key factor in the FOMC's assessment of the current and prospective direction of inflation.

The NFP figures are expected to hit the market and show an addition of 200,000 to the US economy last month, down from January’s whopping 353,000 job gain. From the Eurozone, investors will await the release of quarterly GDP figures from the Eurozone which are expected to come in at 0 percent on a quarterly basis, unchanged from last month while the yearly figures are also expected to remain stable at 0.1 percent.