The U.S. dollar retreated on Thursday as a weaker-than-expected jobless claims report and cautious positioning ahead of Friday’s non‑farm payrolls release pushed the greenback lower. The EUR/USD pair rose to session highs near 1.0850, while the dollar index slipped from recent two‑week highs.
The U.S. Department of Labor reported initial jobless claims of 245,000 for the week ending April 26, well above the consensus forecast of 232,000 and the previous week’s revised 239,000. The higher figure signals a gradual cooling in the labor market, adding to the narrative that the Federal Reserve might eventually ease its policy stance.
Markets now focus on the April NFP report due Friday at 8:30 a.m. ET. Economists expect a gain of 240,000 jobs, down from March’s 303,000, with the unemployment rate steady at 3.8% and average hourly earnings rising 0.3% month‑over‑month. A significant miss could reignite expectations for a Fed rate cut as early as September, further pressuring the dollar and supporting risk assets such as cryptocurrencies. Conversely, a strong print would reinforce the “higher for longer” rate narrative, likely strengthening the dollar and dampening crypto appetite.
Geopolitical developments also influenced currency markets. The announcement of a ceasefire between Israel and Lebanon on June 4 eased some tensions from the Gulf conflict, removing one sticking point in U.S.–Iran talks. However, uncertainty persists as Hezbollah was not consulted and Israel’s occupation of border areas remains unresolved. Still, the dollar lost ground as traders priced in reduced safe‑haven demand.
Technical analysis shows EUR/USD testing resistance at the 50‑day moving average near 1.0860. A break above could target the 1.0900 level, while support lies at 1.0800. Implied volatility on one‑week EUR/USD options hit a three‑week high, indicating traders brace for sharp moves after the NFP.
The European Central Bank is almost certain to raise rates on June 11, while the Bank of Japan is expected to hike to 1% on June 16 despite low inflation. Dollar‑yen remains near ¥160, with Japanese authorities ready to intervene again if the yen’s weakness persists.
For the crypto market, a softer dollar generally supports risk assets, and today’s jobless claims miss has added a modest bullish tilt. However, the true direction hinges on Friday’s NFP. A weak print could accelerate the euro’s recovery and boost crypto prices, while a strong report may reverse these gains. Traders should prepare for heightened volatility across all asset classes.
