Investors Remain Anxious Ahead of US Labor Market Update

The euro continues to be under pressure as traders prefer the safety of the US dollar, pushing the EURUSD pair down toward the 1.10 level for the first time since May 2020. As a result, the dollar index rose to new cycle highs as geopolitical issues, and inflation fears benefit the US dollar.

On the other hand, gold and WTI are going higher, despite the US dollar strength, as these commodities usually strengthen during any war conflict. 

Later today, the US labor market update is due. The non-farm payrolls for February are expected at 400,000, down from 467,000 in January. As a result, the unemployment rate will likely improve slightly to 3.9%. At the same time, wage growth is seen rising year on year but slowing monthly.

Yesterday's US Services ISM showed an unexpected decline to 56.5.1 for February, down from 59.9 previously. The inflation subindex rose to new highs, but new orders and employment subindices declined, showing a stagflation outlook.

US indices remain volatile, although they trade above their last Thursday's lows (the day of the invasion). The market still expects several rate hikes this year, but the situation could quickly change if the military conflict in Ukraine worsens.