• EUR/USD remains on the backfoot near 1.0950 as the Fed is expected to follow a gradual rate-cut approach.
• US labor demand remained robust and wage growth increased in September.
• ECB’s Villeroy supported another interest rate cut on October 17.

EUR/USD struggles to gain ground near the key support of 1.0950 in Monday’s European session. The major currency pair remains on the backfoot as the US Dollar (USD) clings to gains near a fresh seven-week high, prompted by surprisingly upbeat Friday’s United States (US) labor market data for September.

The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, trades close to 102.50. 

The US employment report showed a resilient labor demand and strong wage growth. As per the report, the economy added 254K non-farm jobs, which was significantly higher than the estimates of 140K and the former release of 159K, upwardly revised from 142K. The Unemployment Rate decelerated to 4.1% from expectations and the August print of 4.2%. 

Upbeat employment data forced traders to push back market expectations for the Federal Reserve (Fed) to reduce interest rates by 50 basis points (bps) again in November. The Fed started its policy-easing cycle with a larger-than-usual interest rate cut by 50 bps in September.

Meanwhile, renewed fears of inflation remaining persistent after the release of the hotter-than-expected Average Hourly Earnings for September also expunged Fed large rate cut bets. Average Hourly Earnings, a key measure of wage growth, accelerated at a faster-than-expected pace to 4.0% year-over-year. Month-on-month wage growth measure rose by 0.4%.