EUR/USD extends gains to 45-month highs, market eyes US labour data

[Redator]

EUR/USD is rallying today early in the London session and trades around the ~1.17173 level, up ~0.47%. As a new wave of dollar weakness sweeps the markets, EUR/USD hopes to continue a 5-day winning streak in today’s session.

EUR/USD: Key takeaways from today’s session

• A recent renewal of dollar weakness is allowing EUR/USD to extend gains, and currently trades at 45-month highs
• Following recent Fed commentary suggesting inflation is becoming a secondary issue compared to labour market stability, markets keenly await US jobless claims data later today

EUR/USD: Dollar weakness paves the way for further EUR/USD upside

Having written about the current safe-haven dynamics as part of Monday’s coverage on GBP/USD, it certainly would seem that the dollar can’t catch much of a break this week.

Under pressure for much of 2025, larger-scale macro-events are also contributing to dollar downside, with markets currently finding any opportunity to offload the dollar in favour of other major currencies.

In the case of safe-haven demand, which is admittedly on the back foot, markets seem to be increasingly choosing other currencies over the dollar, most notably the Swiss franc, which trades at highs versus the dollar previously seen in 2011.

At the time of writing, the DXY is in free fall, fast approaching 97.00. If prices are to remain unchanged, the dollar will end today’s session at 39-month lows, adding to EUR/USD upside.

U.S. Dollar Strength Index (DXY), TVC, TradingView, 26/06/2025

EUR/USD: Recent Fed commentary shifts market focus towards labour data

While most expected the Federal Reserve to remain committed to the now-infamous ‘wait-and-see’ approach for some time longer, recent commentary from two Fed officials would suggest that a rate cut in July, although unlikely, is at the very least possible.

Why do we want to wait until we actually see a crash before we start cutting rates? So I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don’t want to wait till the job market tanks before we start cutting the policy rate

Federal Reserve Governor Christopher Waller, Squawk Box CNBC

Having somewhat predictably cited the yet unknown inflationary impact of tariffs in their recent decision to leave rates unchanged at ~4.5%, both Federal Reserve Governors Waller and Bowman have recently made comments suggesting that a July rate cut could be possible, with inflation becoming less of a concern to Fed policymakers following recent data releases.

Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market

Federal Reserve Governor Michelle Bowman speaking in Prague

While the Federal Reserve has recently stated that its two core priorities are keeping the US labour market stable and controlling inflation, it would appear that at least some of its policymakers are beginning to shift focus, even if Chair Jerome Powell remains somewhat hesitant.

As such, US labour data, which will be released later today, will be vital in determining the longevity of the current EUR/USD rally.

• US Initial Jobless Claims (June/21), June 26th 2025, 08:30 EDT
• US Jobless Claims 4-week Average, June 26th 2026, 08:30 EDT
• US Continuing Jobless Claims (June/14), June 26th 2025, 08:30 EDT

The most significant of the three releases will undeniably be initial jobless claims, which will help paint a picture of new and developing unemployment. If claims rise significantly, we can expect rate cut bets to increase, exerting downward pressure on EUR/USD.

Going double with recent commitments to the labour market, EUR/USD traders would be well advised to stay vigilant around the New York open today.

EUR/USD technical analysis

• With bulls currently in control, EUR/USD trades in the upper band of a monthly Fibonacci channel. Immediate resistance can be found at around ~1.19768, with a retrace towards the mid-line possible
• Support can be found at ~1.11628

EUR/USD, OANDA, TradingView, 26/06/2025

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