EUR/USD rose during Friday’s North American session amid higher tensions in the Middle East, despite a strong US jobs report. It traded near 1.1775, up 0.44%.
The US and Iran exchanged strikes linked to control of the Strait of Hormuz. US Secretary of State Marco Rubio said Washington is awaiting Tehran’s response to a 14-point memorandum on extending a ceasefire and reopening the Strait.
US Nonfarm Payrolls rose by 115K in April versus estimates of 62K, while March was revised up to 185K. The Unemployment Rate held at 4.3%, and Average Hourly Earnings increased 3.6% versus a 3.8% forecast.
The US dollar did not recover as consumer sentiment weakened alongside the conflict. The University of Michigan Consumer Sentiment Index fell to 48.2 in May from 49.8, a record low.
One-year inflation expectations eased from 4.7% to 4.5%, and five-year expectations slipped from 3.5% to 3.4%. In Europe, EUR was set to end the week up over 0.44%, while Germany’s Industrial Production fell 0.7% in March.
On charts, EUR/USD was above clustered simple moving averages near 1.1640 and a rising trend line near 1.1411, with RSI (14) around 58. Resistance was cited near a descending trend line from 1.1929.
Looking back to this time in 2025, we saw the EUR/USD push towards 1.1775 despite a solid US jobs report. The primary driver was the US-Iran conflict over the Strait of Hormuz, which overshadowed economic data and weakened the dollar. This geopolitical fear was the market’s main focus, rewarding those who were long on the Euro.
Today, the situation is vastly different, as tensions in the Middle East have subsided, removing a key pillar of dollar weakness. US consumer sentiment reflects this change, with the latest University of Michigan survey for May 2026 climbing to 65.5, a significant recovery from the all-time low of 48.2 recorded last year. This removes the consumer pessimism that previously held the dollar back.
Furthermore, the US labor market is now on much stronger footing, which should support the dollar. The latest report for April 2026 showed the economy added 210,000 jobs, crushing the 115,000 figure from April 2025. With unemployment currently at 3.8%, the Federal Reserve has little reason to consider cutting rates.
While we’ve seen German Industrial Production show a modest rebound of 0.5% recently, unlike the decline in 2025, it isn’t enough to suggest significant Eurozone strength. This creates a clear divergence where the robust US economy supports a hawkish Fed, while the European Central Bank may have to consider easing sooner. This policy difference should continue to weigh on the EUR/USD pair.
Given the current calm and the strong dollar fundamentals, we should consider strategies that benefit from lower volatility and a potential downside move in EUR/USD. Selling out-of-the-money call options or establishing bear call spreads could be effective ways to capitalize on this environment. These positions profit if the pair stays below certain levels, reflecting the shift away from last year’s bullish sentiment.
