The dollar reaffirms itself as unemployment indicators in the United States support the demand for the Greenback

The foreign exchange market experiences significant movements this Thursday, with the EUR/USD pair deepening its weakness after the release of US labor data. The quote is around 1.1662, extending its downward trend for the fifth consecutive day, reflecting pressure on the Euro against the strength of the Dollar.

US Unemployment and Labor Market Data

The labor metrics released by the US Department of Labor present a mixed picture but continue to support the Greenback. Initial Unemployment Claims stood at 208,000 for the week ending January 3, just below the expected 210,000 and higher than the previous revision of 199,000.

The four-week moving average of Initial Unemployment Claims decreased to 211,750 from 219,000, suggesting some stabilization in new claims. However, Continuing Unemployment Claims showed an opposite trend, increasing to 1.914 million from 1.858 million, indicating that a growing number of workers continue to receive unemployment benefits.

Productivity and Labor Costs

Meanwhile, Non-Farm Productivity saw a significant increase of 4.9% in the third quarter, markedly improving from the previous 3.3%. Conversely, Unit Labor Costs declined by 1.9%, reversing the previous 1% increase, suggesting moderate wage pressures in the US economy.

Dollar Reaction and Forex Markets

The release of this data has solidified the bullish position of the US Dollar, which extends its gains for the third consecutive day. The (DXY) Dollar Index, which measures the Greenback against a basket of six major currencies, is around 98.88, reaching its highest level since December 10 and reflecting sustained demand for dollar-denominated assets.

Broader Labor Context

Unemployment indicators add to the mixed signals that have characterized recent sessions. The ADP employment change report showed an increase of 41,000 jobs in the private sector in December, below the estimates of 47,000 but an improvement over the contraction of 29,000 in the previous month. Simultaneously, job openings data (JOLTS) fell to 7.146 million in November from 7.449 million, below the forecast of 7.6 million.

Outlook and Upcoming Events

The set of data suggests that the US labor market maintains its relative strength, although there are tentative signs of gradual cooling. Traders are closely watching the Non-Farm Payrolls (NFP) report on Friday, which is expected to show an increase of 60,000 jobs after the 64,000 rise in the previous month.

This result could significantly impact expectations regarding the Federal Reserve’s monetary policy, with markets pricing in approximately two interest rate cuts for the rest of the year. Federal Reserve Chair Stephen Miran reiterated his dovish stance, indicating he anticipates 150 basis points of cuts in 2026 and expressed concern over the “unnecessary risks” faced by the unemployment market under the current policy.