Global Rates & FX Views: NFP & refunding review
In the aftermath of the recent non-farm payrolls (NFP) report and the US Treasury refunding announcement, the desk posits that the current trajectory of US yields will play a pivotal role in currency movements, especially for major pairs like EUR/USD, GBP/USD, and USD/JPY. Per the full note from BofA Global Research, the limited clarity from last week's FOMC meeting coupled with a steepening of the US yield curve underscores the heightened sensitivity of the market to incoming economic data. The NFP report is particularly significant as it influences both Fed communication and the overall US rate outlook, posing potential shifts in these currency pairs as traders adjust their positioning based on labor market signals.
What the desk is arguing
The desk emphasizes that upcoming data releases, particularly related to labor and inflation, will dictate market direction in the wake of the recent FOMC outcomes. The limited guidance from the Fed has created a dynamic environment, where market participants are keenly focused on economic indicators. According to BofA's analysis, the steepening of the US curve is indicative of a broader shift in investor sentiment.
Statistically, the significance of the NFP report cannot be understated, with notable implications for Fed policy adjustments. Market expectations for continued tightening might be challenged based on the payroll data, potentially reshaping currency valuations as seen in recent trading patterns.
Where it sits in our coverage
Our current consensus target for EUR/USD is set at 1.1700 with a range from 1.1200 to 1.2000. Notable targets from other firms include bofa at 1.1700 for Mar26 and anz at 1.1609 for the same tenor. Notably, our view aligns closely with several forecasts in the upper bound of the spread.
How other firms see it
Looking across the board, firms like ubs and deutschebank maintain bullish stances on EUR/USD, with targets around 1.2000 by Mar26. Conversely, firms like bofa and goldman forecast a more cautious approach, suggesting targets that lie below our consensus position.
Given the intertwined nature of the USD/JPY and the BoJ's policy stance, as well as the GBP/USD reaction to the Bank of England's rates, these pairs are essential to monitor in light of the impending data releases. Movement in USD/JPY, particularly, will reflect changes in US yields impacted by the NFP results.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Elevated sensitivity of FX markets to US NFP and Treasury refunding outcomes.
- 02Limited clarity from the recent FOMC adds volatility to yield expectations.
- 03Significant implications for EUR/USD, GBP/USD, and USD/JPY based on economic data.
- 04Market positioning is heavily influenced by labor market indicators.
Market implications
Watch for the EUR/USD to test resistance levels near 1.1700 amidst upcoming labor market data. A surprise in the NFP results could shift yields and subsequently affect these key currency pairs. Traders should remain vigilant of adjustments in speculative positioning leading into the Fed's next announcements.
Risks to this view
A weaker-than-expected NFP print could undermine the bullish outlook for USD and shift the focus toward easing Fed policies, negatively impacting USD valuations against major currencies. Alternatively, robust labor data might reinforce expectations of a more aggressive Fed stance, exacerbating a stronger USD position.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Scotiabank | Bearish | 1.1200 |
Bank of America | Bearish | 1.1200 |
ANZ | Bearish | 1.1400 |
Please join Sphia Salim in conversation with Aditya Bhave, Mark Cabana and Meghan Swiber post-payrolls and US Treasury refunding. Given the limited guidance at last week's FOMC meeting and resulting US curve steepening, data has become an even stronger focal point for markets. We will discuss the implication of the NFP report for Fed speak, the September decision and US rates.
We will also highlight any key takeaways from the Wednesday US Treasury refunding announcement. The call took place at 10am ET, 3pm BST, 4pm CET on Friday 7th Aug. Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation.
Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ©2026 Bank of America Corporation. All rights reserved.
Sources & References
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