EUR/USD Holds Ground Above 1.1650 Amid Manufacturing Weakness and Upcoming NFP Trading Catalysts

The Euro stabilizes as USD momentum fades following softer-than-expected factory data. - ISM Manufacturing PMI remains contractionary at 48.7 for the sixth straight month. - Key labor indicators show deterioration; market braces for NFP report this Friday.

EUR/USD is stabilizing near the 1.1670 level on Tuesday’s American trading session, as the US Dollar loses its edge following the Institute for Supply Management’s Manufacturing PMI release. The pair rebounded from an intraday floor of 1.1613, though trading remains choppy within a tight 1.1600-1.1720 band, reflecting trader caution ahead of Friday’s critical Nonfarm Payrolls (NFP) data—a cornerstone event for NFP trading strategies.

Mixed ISM Data Points to Labor Market Stress

The August ISM Manufacturing PMI printed at 48.7, marginally better than July’s 48.0 reading but still confirming six consecutive months in contractionary territory. The headline figure masks divergent underlying trends:

• New Orders surged to 51.4, marking the first expansion signal in seven months and suggesting early demand stabilization.
• Employment Index cratered to 43.8, revealing persistent weakness in manufacturing job creation.
• Production Index slumped to 47.8, keeping factory output in contraction.
• Prices Paid moderated to 63.7 from 65.3, though inflation pressures remain stubborn.

This mixed picture—resilient orders offset by crumbling hiring and output—creates uncertainty that directly impacts NFP trading positioning. If manufacturing employment struggles this much in the sector data, broader payroll figures could disappoint.

Dollar Index Retreats as Risk Sentiment Shifts

The US Dollar Index (DXY) retreated from an intraday high of 98.60 to hover near 98.00, signaling wavering confidence in the Greenback following the muddled PMI print. The currency’s weakness is reinforced by softer Treasury yields: the 10-year slipped toward 4.27% and the 30-year eased to around 4.96%, both reflecting cautious positioning ahead of the employment data.

Currency Strength Matrix Today

EUR/USD rebounders show the Euro outperforming the British Pound most decisively among major pairs:

The Euro’s outperformance against Sterling underscores relative demand for risk-adjacent assets, even as USD consolidation continues.

The Road Ahead: NFP Trading Takes Center Stage

With manufacturing data painting a fragile picture, attention pivots decisively to Friday’s Nonfarm Payrolls report. The employment weakness flagged in ISM readings—particularly the 43.8 Employment Index—could foreshadow softer headline job creation. A material NFP miss would likely trigger fresh EUR/USD upside, as it would reinforce Fed rate-cut expectations. Conversely, resilient payroll numbers could reignite dollar strength and reverse the modest Euro gains seen today.

For active NFP trading participants, the narrow 1.1600-1.1720 range represents a compressed waiting zone. Volatility will likely remain muted until the employment report arrives, with the pair vulnerable to sharp repricing once the data hits.