EUR/USD Breakout: Euro Targets 1.16 Before US Payrolls
The euro has cleared the mid-1.15s it held for weeks. Why the dollar is slipping despite a hawkish Fed, and how the US jobs print will decide the breakout.
Out of the Range
The euro has pushed through the ceiling that capped it for weeks. EUR/USD had settled in the mid-1.15s, the zone Scotiabank flagged as its range, and buyers are now leaning over it. The next line is 1.16; a clean break opens the door toward 1.17. Desk chatter says the bulls hold the upper hand and momentum favours continuation. The dollar index is easing in step, with the greenback losing ground across the majors. For a pair boxed between 1.14 and 1.15 for weeks, this reads as a regime shift, not a one-day mood.
The Dollar Already Owns Its Premium
The move looks backwards at first glance. The Fed sits at 3.75%, and the market still prices a hard line: cuts are off the table, and at times traders have leaned toward the first hike since 2023. That backdrop usually underwrites the dollar. The catch is that the premium is already in the price. The greenback carries the hawkish call, and fresh reasons to buy it are thin. Meanwhile the euro zone is printing firmer data, giving the single currency a fundamental bid, while hawks on the ECB council keep any near-term easing bet in check. The rate gap has stopped working against the euro, the carry disadvantage is shrinking, and the pair is turning. Anyone still short euro is watching the easy dollar-strength thesis crack.
Payrolls Are the Fault Line
The real test is still ahead. US labour data is the next catalyst, and it sets the direction. A soft print would knock out the hike bet and strip the dollar of its last support: 1.16 would fall away quickly, and the move would gain fundamental cover. A strong number does the opposite, validating the Fed call and choking the breakout before it matures, with a snap back into the old range. For positioning, the long-euro trade lives on data risk; a tight stop under the 1.15 zone keeps the wager honest and caps the damage of a false break. Implied vol should firm into the release, which tilts the edge toward option structures over naked spot. Dollar holders should treat the number as a binary event. The range is broken. Whether it stays broken comes down to a single figure.