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Euro climbs further beyond 1.1400 as USD weakens ahead of US NFP report

July 2, 2026

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EUR/USD attracts fresh buyers on Thursday amid a broadly weaker USD.
Iran risks and Fed hike bets should limit USD losses and cap spot prices.
Reduced ECB rate hike bets warrant caution for bulls ahead of the NFP.

The EUR/USD pair builds on its intraday ascent and reclaims the 1.1400 mark during the early part of the European session on Thursday, reversing a major part of the overnight losses to the weekly low.

The US Dollar (USD) attracts some sellers on the back of Wednesday’s softer-than-expected US macro data and less hawkish tone than expected from Federal Reserve (Fed) Chair Kevin Warsh. In fact, the ADP report showed that private-sector employment rose 98K in June, less than the previous month’s unrevised reading of 122K and missing estimates of 113K. Adding to this, the ISM Manufacturing PMI eased from 54 to 53.3 in June. Meanwhile, Fed’s Warsh opted not to provide explicit hints about future interest rate paths, which keeps the USD bulls on the defensive and offers some support to the EUR/USD pair.

That said, Warsh acknowledged that inflation remains elevated and reiterated a firm commitment to the Fed’s 2% target. Adding to this, traders are still pricing in a greater chance that the US central bank will raise borrowing costs at least once by the end of this year. This, along with persistent geopolitical uncertainties, should limit deeper USD losses. In fact, the recent US-Iran indirect talks in Doha concluded with no sign of making headway toward a lasting peace amid tensions over the critical Strait of Hormuz. Separately, Russia launched a barrage of missiles and drones on Ukraine’s capital, Kyiv, early Thursday.

On the other hand, softer Eurozone inflation data for June, released on Wednesday, should significantly lower the risk of another interest rate hike by the European Central Bank (ECB) in July. This, in turn, could act as a headwind for the shared currency and contribute to capping the EUR/USD pair. Traders might also refrain from placing aggressive bullish bets and opt to wait for the release of the closely-watched US monthly employment details. The popularly known US Nonfarm Payrolls (NFP) report will influence the Fed’s policy path, which, in turn, should provide fresh impetus to the USD and the currency pair.