EUR/USD Retreats from 2-Month High as Jobless Claims Rise and Traders Await NFP

EUR/USD Retreats from 2-Month High as Jobless Claims Rise and Traders Await NFP

The Euro (EUR) lost momentum against the US Dollar (USD) on Friday after EUR/USD retreated from a two-month high of 1.1495, briefly touched on June 5. As of the Asian session, the pair was trading near 1.1440, with market participants repositioning ahead of the much-anticipated US Nonfarm Payrolls (NFP) report.

Weak US Labor Data Sparks Uncertainty

Economic data out of the US has added to volatility in the pair:

• Initial Jobless Claims rose to 247,000, exceeding the forecast of 235,000, signaling increased labor market softness.
• ADP private employment figures for May rose by just 37,000, a significant miss compared to the expected 115,000 and sharply down from April’s revised 60,000 gain.

These labor market indicators are stoking speculation that the upcoming NFP report may disappoint. Analysts expect 130,000 new jobs added in May, compared to 177,000 in April, with the unemployment rate projected to remain at 4.2%.

ECB Delivers Expected Rate Cut

On Thursday, the European Central Bank (ECB) enacted a 25 basis point rate cut, largely in line with market expectations. While the cut was priced in, the EUR/USD initially spiked higher before retreating on broader market caution.

With Eurozone inflation cooling and growth prospects softening, the ECB’s dovish stance could cap any significant Euro upside in the near term.

Trump-Xi Call Rekindles Trade Tensions

In a separate development, US President Donald Trump spoke with Chinese President Xi Jinping, calling the conversation “positive” and signaling a willingness to restart stalled tariff negotiations. However, Trump’s team reportedly clashed with Chinese representatives following allegations that China violated terms of a temporary tariff truce established in Geneva.

Any renewed friction in US-China trade relations could weigh on risk appetite and bolster the USD as a safe haven—adding another layer of complexity for EUR/USD traders heading into the weekend.

EUR/USD Technical Outlook

• Resistance: Immediate upside faces pressure at 1.1495 (June high).
• Support: First key support is seen at 1.1410, followed by 1.1350.

Outlook: Focus on NFP and Global Trade Sentiment

The next 24 hours will be critical for EUR/USD direction. A weaker-than-expected NFP print could send the Dollar lower, potentially reviving Euro strength despite the ECB’s dovish tone. On the flip side, strong US data may reinforce Dollar dominance in the short term.

Geopolitical developments, especially the Trump-Xi dynamic, will also play a role in shaping risk sentiment and broader market flow.

Related Reads on Tredu:

• What the ECB Rate Cut Means for the Euro
• NFP Report Preview: What to Expect This Month
• How US-China Trade Tensions Affect Forex Markets