American statistics supported the dollar and weakened the euro
The euro remained under pressure on the global currency market FOREX on Friday, September 25. EUR/USD is trading around 1.1370–1.1380 dollars per euro, near two-month lows. According to market quotes, the pair dropped to about 1.1359 on Thursday, and the decline over the last few sessions has become quite noticeable.
One of the pressure factors for the euro was the US labor market statistics published the day before. According to the US Department of Labor, the number of initial claims for unemployment benefits for the week ending September 19 decreased by 1,000 to 197,000. Analysts surveyed by Reuters expected a figure of around 201,000.
Thus, the US labor market proved more resilient than expected. For the currency market, this was an additional argument in favor of the dollar, as strong employment reduces the need for rapid monetary policy easing by the Federal Reserve.
Why unemployment data matters for the euro
The decrease in jobless claims does not in itself mean a sharp change in the US economic situation, but in the current environment, the market closely monitors any signs of resilience in the US economy.
After the Fed's recent decision, investors are particularly sensitive to economic statistics. A more resilient labor market can support expectations of a fairly tight US monetary policy. As a result, yields on US assets remain attractive, and the dollar receives additional support.
That is why the fresh jobless claims data turned out to be rather positive for the US currency and negative for EUR/USD.
The euro remains under pressure
Pressure on the European currency has persisted for several trading sessions. According to Forex.com, EUR/USD has fallen more than 2.9% from August highs, and on September 23, the pair approached levels not seen since July.
At the same time, the euro's weakness is not only due to US statistics. The difference in expectations regarding the monetary policy of the Fed and the European Central Bank plays an important role. Market participants continue to factor in the likelihood of a stricter policy by the US regulator, which supports the dollar.
Meanwhile, some European indicators look relatively resilient. For example, French consumer confidence data for September showed the index holding at 86 points. However, this statistics is not enough to reverse the overall EUR/USD trend yet.
What's next
Today, FOREX attention will focus on new US statistics, including durable goods orders and the final University of Michigan consumer sentiment reading. In addition, investors will monitor speeches by Fed officials.
In the short term, the euro remains vulnerable as long as the dollar is supported by a resilient US economy and expectations regarding Fed policy. At the same time, after such a notable decline, the market may react especially sharply to new data: weak US statistics could trigger a corrective rise in the euro, while new strong US data may intensify pressure on the European currency.
