The EUR/USD pair has reached its highest level since 3 October due to a weakening US Dollar following soft Jobless Claims data. The US Initial Jobless Claims have risen to 236,000, surpassing predictions, which hints at a cooling labour market and affects the Dollar.
The Euro continues to strengthen against the US Dollar, reaching around 1.1748. Concurrently, the US Dollar Index is under pressure, dwindling to 98.25, its lowest since 17 October, as the Fed’s cautious stance impacts broader Dollar sentiment.
Jobless Claims Impact
The data revealed a rise in the 4-week moving average to 216,750 and a decrease in Continuing Jobless Claims to 1.838 million. These figures align with the Federal Reserve’s recent monetary policy statement where downside risks to employment were noted, leading to a 25 basis point interest rate cut.
The effects on currency movements are evident from the heat map. The US Dollar showed diverse percentage changes against key currencies, being strongest against the Australian Dollar. Meanwhile, the Euro appreciated by 0.46% against the USD, continuing its upward trend amid softer US economic data.
With the EUR/USD touching 1.1748, the immediate trend points to continued US Dollar weakness. We should consider positioning for further upside in the Euro, as the market digests the Federal Reserve’s recent interest rate cut. This move is supported by a clear shift in momentum against the Greenback.
The latest jobless claims figure of 236,000 is a key piece of data, pushing the 4-week moving average above 215,000. Looking back, we saw a similar pattern in late 2023 when a sustained rise in claims preceded a slowdown in hiring for the first half of 2024. This historical parallel suggests the current cooling labor market is not a one-off event and could weigh on the dollar for weeks.
Market Forecast
Attention now shifts to the next major data point, the upcoming Non-Farm Payrolls (NFP) report. Current market whispers are for a headline number below 120,000, which would be the lowest reading in over a year and would likely reinforce the Fed’s cautious stance. A weak NFP print would almost certainly push EUR/USD toward the 1.1850 resistance level.
For derivative traders, this environment favors buying call options on the EUR/USD. The increased market volatility means options are more expensive, but it also provides an opportunity to profit from sharp upward moves while defining your maximum risk. We are seeing notable interest in the January 2026 and February 2026 contracts with strike prices at 1.1800 and 1.1900.
Furthermore, the interest rate futures market is telling a compelling story. According to the latest data from the CME FedWatch Tool, the market is now pricing in a 65% probability of another 25 basis point cut by the Fed’s March 2026 meeting. This expectation of further easing will likely act as a headwind for any potential US Dollar recovery attempts in the near term.
Beyond the Euro, the dollar’s broad weakness opens up plays against other currencies, except for the Australian Dollar, which is facing its own headwinds. Given the Swiss Franc’s significant strength against the dollar today, options on USD/CHF puts could be an effective way to trade this divergence. We must remain focused on the fact that the Fed has clearly signaled its concern over the job market, a narrative that rarely reverses quickly.
