EUR/USD is steady in a tight range around 1.0400 during the European session on Friday (7/2) as the US Dollar (USD) trades cautiously ahead of the US (US) Nonfarm Payrolls (NFP) data for January, due to be published at 13:30 GMT. The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is fluctuating around 107.80.

Economists expect the US economy to have added 170,000 jobs, down from 256,000 in December. The Unemployment Rate is expected to remain steady at 4.1%. The official employment data is expected to drive market speculation about how long the Federal Reserve (Fed) will keep interest rates at current levels.

Signs of a strong labor market will raise expectations that the Fed will remain on hold on interest rates for longer. Conversely, a weak figure will stimulate dovish Fed bets. According to the CME FedWatch tool, the Fed is expected to announce its next rate cut at its June policy meeting.

Last week, Fed Chair Jerome Powell said the central bank would make adjustments to monetary policy only after seeing "real progress in inflation or at least some weakness in the labor market" after the Fed left interest rates unchanged in a range of 4.25%-4.50%.

Investors will also be watching Average Hourly Earnings data, a key measure of wage growth that drives consumer spending. The wage growth measure is expected to have slowed to 3.8% year-on-year from 3.9% in December. On the month, Average Hourly Earnings were expected to have grown steadily at 0.3%.(Newsmaker23)

Source: FXstreet