- Rising initial US jobless claims trigger EUR/USD rally and Treasury yield fall.
- The technical recession in the Eurozone is overshadowed by the ECB’s hawkish line signals.
- Investors are watching US inflation data for June 13 and the FOMC meeting.
He EUR/USD It surged above the 1.0750 zone on Thursday, after less stellar United States (US) jobs data weakened the US dollar (USD). That being said, EUR/USD is trading around 1.0770 after hitting a daily low of 1.0692.
Euro Prospers as Dollar Weakens on Rise in Jobless Claims
Before the open on Wall Street, the EUR/USD pair rose on the back of data released by the US Bureau of Labor Statistics (BLS). Initial Jobless Claims for the week ending June 3 rose by 261,000, above the 232,000 forecast by analysts, the highest level since October 2021. This adds to an excellent Non-Farm Payrolls report last Friday, which showed that the economy created 339,000 jobs, but the rise in the unemployment rate was a prelude to data from the previous week.
EUR/USD reacted higher, while US Treasury yields put downward pressure on the Dollar. The US 10-year yield fell 7.5 basis points to 3.20% as traders remain optimistic that the Federal Reserve (Fed) will not raise rates at its June meeting. The odds of a 25 basis point rise in June according to CME’s FedWatch tool are 52%, up from 50.9% yesterday.
The Dollar Index, which measures the behavior of a basket of six currencies against the Dollar, plunged 0.73% to 103.345.
On the other hand, the Eurozone (EU) economy fell into technical recession, according to the first quarter of 2023, with a drop in gross domestic product (GDP) of 0.1% quarter-on-quarter, unchanged from the fourth quarter of last year. Looking at year-on-year data, the EU economy slowed to 1% from consensus 1.2%, down from the last quarter 2022 reading of 1.8%.
Despite this report, recent hawkish comments from European Central Bank (ECB) officials, led by its president Christine Lagarde, keep traders eyeing a 25 basis point rise in June and July. Klas Knot, president of the Dutch central bank and ECB member, said Wednesday that at least two more hikes are needed, and then the ECB could become data dependent.
upcoming events
The EU agenda will include statements by the vice president of the ECB, Luis de Guindos, on Friday. The US calendar will be empty, with traders eyeing Tuesday, June 13, with the release of inflation data, along with the start of the FOMC meeting.
EUR/USD Price Analysis: Technical Insights
The EUR/USD pair has resumed its bullish trajectory after trading sideways for the past nine days. On its way north, the pair recaptured the 20-day EMA at 1.0772, although it is still far from breaking above 1.0800. Although the RSI is about to cross its bullish zone, downside risks remain. If the RSI heads north, EUR/USD could test 1.0800, followed by the 50-day EMA at 1.0816. On the other hand, if the RSI turns lower, the pair could drop towards the weekly lows of 1.0660, but it needs to break below 1.0700 first.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
