EUR/USD Gains Momentum, Approaching Last Week's High

Unexpectedly, jobless claims in the United States have experienced a sharp increase, reaching the highest level since October 2021. This development has had a negative impact on the US Dollar, causing it to weaken across the board. The DXY, a measure of the dollar's strength against a basket of other major currencies, has dropped below 103.50 as a result.

EUR/USD Approaches Previous Week's High

In response to the US employment data, the EUR/USD currency pair has gained momentum and is steadily approaching the high reached last week, nearing the 1.0800 mark. The pair's upward movement has been fueled by the broad decline of the US Dollar.

US Employment Data Sparks Euro Strength

Following the release of the US employment data, the EUR/USD pair has experienced a surge in upward momentum. Currently trading at 1.0770/75, it has reached its highest level since the previous Friday. The weakening of the US Dollar against other currencies has provided support for the euro's rise.

Dollar Suffers from Negative News

The latest weekly report from the Labor Department revealed a significant jump in initial jobless claims to 261K for the week ending June 3. This figure surpassed market expectations of 235K and represents the highest level since October 2021. Consequently, the US Dollar has weakened further, dropping to new daily lows against most major currencies, while US yields have also declined. The DXY has tumbled, testing weekly lows below 103.40.

Impact on Federal Reserve Rate Hike Expectations

These employment figures have dampened expectations of a potential rate hike by the Federal Reserve next week. With the FOMC's decision set to be announced on Wednesday, the consensus among analysts is that the Fed will maintain interest rates at their current level.

Eurozone Economy Contracts, ECB Rate Hike Expected

In separate news, data from Eurostat revealed that the Eurozone economy contracted by 0.1% in the first quarter, revised from an earlier estimate of 0.0%. Nevertheless, the European Central Bank (ECB) is still expected to announce a rate hike next Thursday, despite the weak activity figures. ECB President Lagarde and other members of the Governing Council have emphasized that inflation remains elevated, reinforcing the case for a rate increase.

EUR/USD Breaks Away from 1.0700 Level

The EUR/USD pair has struggled to consistently move away from the 1.0700 level in recent days. However, on Thursday, it appears to be breaking out to the upside, driven by the strong momentum of the euro. The pair is now approaching the highs reached last week around 1.0780, and if it surpasses that level, attention will shift to 1.0800/05.