The EUR/USD pair continued to drift lower, reaching around 1.0415 during the Asian trading session on Friday. Trading volumes remained thin, as many traders are on holiday ahead of the New Year. Later on Friday, the preliminary reading of the US Goods Trade Balance for November is expected, which could influence market sentiment.
US Jobless Claims Data Supports USD
Data released Thursday by the US Department of Labor showed that weekly Initial Jobless Claims dropped to their lowest level in a month. The number of Americans filing for new unemployment benefits declined to 219,000 for the week ending December 21, down from 220,000 the previous week. This figure came in below the market consensus of 224,000, further supporting the US Dollar.
The US Dollar Index (DXY) was last up 0.02% at 108.10, holding below its two-year high reached earlier this week. The Federal Reserve’s indication of a slower pace of rate cuts in the coming year, compared to the previous months, could provide additional support for the Greenback.
ECB’s Dovish Outlook Weighs on Euro
Across the Atlantic, European Central Bank (ECB) Governing Council member Boris Vujcic stated last week that the ECB is likely to cut borrowing costs again, should incoming data align with its projections. The ECB has already implemented four rate cuts this year, bringing the deposit rate to 3.0%. Analysts expect the ECB to continue with quarter-point reductions until it reaches 2.0% by June. This dovish stance is expected to weigh on the Euro, potentially pushing it lower against the US Dollar.
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