EUR/USD softens as US Jobless Claims keep the Dollar supported

EUR/USD extends losses for a fifth straight day as firm US data lifts the Greenback.
US Jobless Claims data point to a resilient but gradually cooling labour market.
Focus shifts to Friday’s NFP release to gauge the Fed’s near-term policy path.

Vishal Chaturvedi FXStreet

The Euro (EUR) edges lower against the US Dollar (USD) on Thursday, with EUR/USD extending its slide as the Greenback builds on recent gains following the release of US weekly labour-market data. At the time of writing, EUR/USD trades around 1.1662, remaining on the back foot for a fifth consecutive day.

Data released by the US Department of Labor showed Initial Jobless Claims rose modestly to 208,000 in the week ended January 3, slightly below market expectations of 210,000 but above the previous week’s revised reading of 200,000.

The four-week moving average of Initial Jobless Claims fell to 211,750 from 219,000. Continuing Jobless Claims rose to 1.914 million from 1.858 million, pointing to a gradual increase in the number of people remaining on unemployment benefits.

Meanwhile, Nonfarm Productivity rose sharply to 4.9% in the third quarter from 3.3%, while Unit Labor Costs fell 1.9% after increasing 1% previously.

In reaction to the data, the US Dollar continues to firm, extending its advance for a third consecutive day. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 98.88, its highest level since December 10.

The data follow Wednesday’s mixed US labour signals. The ADP Employment Change report showed private payrolls increased by 41,000 in December, below expectations of 47,000 but reversing the previous month’s decline of 29,000. Separately, JOLTS data showed job openings fell to 7.146 million in November from 7.449 million, undershooting forecasts of 7.6 million.

Overall, the data suggest the US labour market is still in decent shape but is showing tentative signs of cooling. Attention now turns to Friday’s Nonfarm Payrolls (NFP) report, with economists forecasting a 60,000 rise in payrolls, following a 64,000 gain in the prior month. The outcome is likely to play a key role in shaping near-term Federal Reserve (Fed) expectations, with markets currently pricing in around two interest-rate cuts later this year.

Fed Governor Stephen Miran, whose term is set to end later this month, reiterated his dovish stance on Thursday. Miran said he is looking for about 150 basis points of rate cuts in 2026 and flagging concern that the Fed may be running unnecessary risks to the labour market.He added that rates remain materially above neutral.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Vishal Chaturvedi

FXStreet

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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