The EUR/USD pair is currently trading around 1.17953. The market is showing moderate volatility in reaction to the latest macro data from Europe as well as updates from the US labor market. The pair has pulled back from recent local highs because the impulses coming from industrial data and ECB signals were too weak to sustain the previous upward momentum. Investors remain cautious, monitoring both risk-off sentiment and expectations regarding the decisions of the new Fed chair.

Source: xStation5

What is shaping the EUR/USD rate today?

ECB decisions and communication

The ECB yesterday kept interest rates unchanged, in line with market expectations. The bank emphasized relatively stable inflation and the risk of an overly strong euro, limiting room for further currency appreciation. In practice, this means that EUR/USD is currently reacting primarily to macroeconomic data and market sentiment rather than the ECB’s decisions themselves.

US labor market data

Recent US labor market data showed an increase in Challenger layoffs from 35,000 to 108,000, as well as higher weekly jobless claims at 231,000 versus the expected 213,000. JOLTS job openings fell to 6.5 million, while the market had expected 7.2 million, signaling a slightly weaker labor market.

Risk-off sentiment and European data

Weaker industrial data from Germany and a modest decline in European equities are maintaining moderate risk-off sentiment. Short-term fluctuations in EUR/USD are limited, and the pair remains below the 1.18 level. Nonetheless, the overall upward trend structure for the euro remains intact.

New Fed chair and market expectations

Markets are placing hopes on the new Fed chair, expecting relative independence from pressure by the US administration. Investors anticipate that the Fed will not yield to calls for rapid and aggressive rate cuts, which could destabilize markets. This factor provides the US dollar with some strength in investors’ eyes while also limiting sudden market moves, including sharp USD gains against the euro.

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