The EUR/USD pair strengthened, trading near 1.1715 at the open of the European session on Monday (September 8th). The common currency received support from a weakening US dollar following Friday's poor US Nonfarm Payrolls (NFP) report, although the likely collapse of the French government kept the eurozone optimistic.

The NFP confirmed a deteriorating US labor market, with the weakest growth since 2021 and a higher unemployment rate. The data virtually confirmed market expectations for an interest rate cut at next week's Federal Reserve (Fed) meeting and re-raised the possibility of a 50 basis point rate cut. The US dollar weakened following the release.

However, the euro faced its own difficulties on Monday, as French Prime Minister Françoise Bayrou faced a no-confidence motion, which was expected to fail, later in the day. French long-term yields declined from last week's multi-year highs, but investor concerns about political turmoil in the eurozone's second-largest economy posed a significant threat to the currency.

On the macroeconomic front, German Industrial Production figures rose as expected, but the trade surplus narrowed more than expected. Sentix Investor Confidence data will also be in the spotlight. However, the highlight of the week is the European Central Bank's (ECB) monetary policy decision, which will be released on Thursday. (alg)

Source: FXstreet