The US currency is under pressure ahead of the release of the US labor market report, albeit with an edge against the European currency. At the same time, the euro leaves no attempt to rise and catch up. Currently, a bearish trend is common in the market, pushing the US and European currencies into a pessimistic state. According to Commerzbank economists, the long-term strengthening of the US labor market is significantly supportive of the greenback. Experts put the sign of equality between a strong labor market and a rising dollar. According to preliminary estimates, the positive trend in USD will continue as long as the Federal Reserve adheres to restrictive monetary policy. This situation benefits the US currency, but weakens the position of the European currency. The EUR/USD pair traded at 1.0012 on Thursday morning, September 1, attempting to break out of the current range. At the same time, analysts are paying attention to the high probability that the pair will move towards parity. The greenback fell slightly on Wednesday evening August 31 after the release of macroeconomic statistics on the US labor market, but has since recovered its short-term losses. According to an analytics firm, US private-sector employment rose by 132,000 last month. According to preliminary forecasts, the number of initial jobless claims in the United States rose to 2 8,000 on Friday. National unemployment data will be released on September 2. Experts expect the index to stay at the July level (3.5%) and increase the number of jobs in the non-farm sector. of this country. Many currency strategists rely on strong US employment data and falling unemployment. They consider these indicators the most important for the Fed and its future monetary policy. However, some experts say the key indicator for the central bank is wages. Again, Fed Chairman Jerome Powell and other FOMC members are looking forward to a „cooling off” of the domestic labor market. Fed officials are trying to avoid a situation in which wage growth triggers a new wave of inflation. In such a situation, the increase in the number of vacancies recorded in August is a negative signal for the central bank. In this context, the European currency is trying to maintain equilibrium and break out of the price loss. However, his efforts paid off with rare rebounds and then declines. Adding fuel to the fire is uncertainty about the European Central Bank’s next steps on exchange rates. Next week, the central bank will raise interest rates by 75 basis points, according to Nordea economists. The Bank believes that even negative economic growth forecasts in the region will not hinder this. For now, the inflation rate in the euro area remains stable at a high level. According to current reports, inflation in the EU countries reached an impressive 9.1% in August. Previously, this figure was 8.9%. The current situation is weakening the position of the euro, which is already struggling to survive. According to analysts, the weakening of the euro against the dollar is due to the Fed’s aggressive tightening of monetary policy. At the same time, the current parity between currencies could disappear when the EU compromises on tightening monetary policy or when inflation in the US returns to the 2% target. However, both of these cases are unlikely, experts say. According to experts, the 1:1 ratio between the dollar and the euro will remain until EU countries start tightening monetary policy like the United States. However, there are many pitfalls here, as the ECB has to find a compromise among all the countries in the eurozone. Many experts believe that by the end of 2022, the balance of power in the EUR/USD pair will change, so the topic of parity will be dropped. Experts allow a change in the ECB’s actions on monetary policy. The same goes for the Fed, which is worried about problems in the labor market and soaring inflation. According to analysts, the pair will trend in the usual ratio of 1.0500-1.1000. In the event of a strong recovery, the EU economy will receive a solid reward for exports and economic growth at the expense of the US and China, experts point out. Market participants are preoccupied with questions: Will the Fed take a decisive approach to monetary policy? Will the ECB follow suit? Many traders and investors are skeptical about the immediate outlook for the dollar and the euro. At the same time, analysts expect the main rate to fall in the second half of 2023. Executing such a scenario would weaken the greenback and limit its upside potential. In the current situation, some experts believe that the market is daydreaming and expecting more rigidity from the Fed in monetary policy making. In this regard, everything depends on the level of unemployment in the country. The over-consolidation of the labor market in the United States is prompting the central bank to tighten monetary policy as quickly as possible. Fed officials are accelerating the pace of this tightening, stressing that they are prepared to temporarily sacrifice the economy to contain inflation. However, a few months ago, they said they would try to avoid a recession. However, despite the economic turmoil, the US currency remains strong and remains competitive in the global market.