Last Friday's unexpected slump in the US jobs market prompted a sharp drop in the dollar, amplifying bets on imminent Federal Reserve rate cuts. But today's over?30% surge in oil prices in the early trading day has wiped out plans for monetary easing and sparked talk in the market about the need to hike. In short, it's going to be lively for a while.
All of this has muddled views among Fed officials.
"February's NFP report was wildly inaccurate," Chicago Fed President Austan Goolsbee said in an interview. "If a situation like that persisted for several months, it would be a serious labour market concern."
His colleague at the Federal Reserve Bank of San Francisco, Mary Daly, noted that the data undermine the notion of labour market stabilization. "Hopes for labour market stability may have been excessive, and we really need to watch the jobs market closely," she told CNBC.
The optimistic reading—that February's drop will prove temporary rather than structural—argues the decline was driven by one?off factors like severe winter weather and strikes in the healthcare sector.
"These factors mean that job counts barely changed," said National Economic Council Director Kevin Hassett, a close advisor to President Donald Trump.
On Friday, two other Fed officials signalled they are in no rush to change their stance. Susan Collins, president of the Federal Reserve Bank of Boston. Besides, Cleveland Fed chief Loretta Mester said they still think rates should remain on hold for some time.
"Clearly, the number disappointed, mainly because many Americans lost jobs," Mester said. But she added she still defines the labour market as stabilizing, in part because of the rate cuts the Fed implemented late last year.
The jobs data are unlikely to alter expectations that Fed officials will leave rates unchanged for a second consecutive meeting on March 17–18. After three cuts at the end of 2025, officials signalled readiness to be patient this year, citing signs of stabilization in the labour market.
Traders currently expect one to two additional rate cuts by year-end, but the energy market could change that very quickly. Even if Fed views shift, officials can no longer signal it now — the central bank has entered its quiet period ahead of the next meeting.
Technical outlook for EUR/USD
Buyers now need to reclaim 1.1665. Only that will allow a test of 1.1600. From there, the currency pair could climb to 1.1635, but doing so without support from major players will be difficult. The most distant upside target is 1.1670. On the downside, I expect significant buyer interest only around 1.1510. If no buyers appear there, it would be prudent to wait for a new low at 1.1472 or to open long positions from 1.1433.
Technical outlook for GBP/USD
Pound buyers need to take the nearest resistance at 1.3340. Only that would allow targeting 1.3380, above which a further breakout will be hard. The most distant upside target is 1.3420. On the downside, bears will try to seize control at 1.3295. If they succeed, a break of that range would deal a heavy blow to the bulls and could push GBP/USD down to 1.3255 with the potential to extend to 1.3215.