EUR/USD trims gains, US Dollar bounces up with Jobless Claims on tap.

The Euro retreats from weekly highs, and the US Dollar picks up from lows ahead of US Claims data.
The US Dollar depreciated across the board on stagflation concerns and increasing expectations of Fed rate cuts.
The EUR/USD is under renewed bullish pressure, aiming for 1.1700 and 1.1745.

The EUR/USD pair appreciates for the third consecutive day on Thursday. Risk appetite amid hopes of a peace deal in Ukraine has prevailed over further weak data from Germany, while renewed concerns about a potential economic downturn in the US have been weighing on the US Dollar.

The Euro (EUR) extended its rebound from levels right below 1.1400 last week to the upper range of the 1.1600s on Thursday. The pair is showing marginal gains on the daily chart, trading at 1.1665 ahead of the American session opening.

The common currency is drawing support from news about the meeting between the US envoy Steve Witkoff and Russian President Vladimir Putin, which has been considered positive by US President Trump and has boosted speculation about an upcoming peace summit between Russia and Ukraine.

The US Dollar (USD), on the other hand, remains on the defensive, as recent US macroeconomic data has boosted hopes that the Fed will cut rates, at least twice in the second half of the year, highly likely starting in September. Beyond that, Trump is expected to nominate loyalists for the Government Board’s vacancy left by Adriana Kugler, further eroding the independence of the central bank.

In Thursday’s calendar, the focus will be on the US weekly Jobless Claims, which will be observed with particular interest after the Nonfarm Payrolls data released last week showed that the US economy has created much fewer jobs than initially thought, triggering a sharp reversal for the US Dollar.

Daily digest market movers: Risk appetite and concerns about US economy weigh on the US Dollar

The Euro remains firm on Thursday, supported by a positive market sentiment as hopes of a peace deal in Ukraine have offset the soft Eurozone macroeconomic data and the disappointment about an unfavourable trade deal with the US. The US Dollar, on the contrary, keeps trading lower across the board as recent data have brought stagflation concerns back to the table.
Later on Thursday, the focus will be on the US Jobless Claims, which are expected to have increased by 3,000 to 221,000 in the last week of July. The US Dollar is likely to be more vulnerable to a weak reading, as it would add to growing concerns about a deteriorating labour market.
On Wednesday, Boston Fed President Susan Collins and Board of Governors member Lisa Cook highlighted the risks of policy uncertainty and warned that trade tariffs might boost inflation and lower hiring, comments that failed to provide any support to the Greenback.
Meanwhile, US President Donald Trump muddied the global trade outlook further, threatening with 100% tariffs on foreign-made semiconductors, introducing additional 25% tariffs on India for buying Russian Oil, and threatening China with similar sanctions.
In the Eurozone, German Industrial Production contracted by 1.9% in June, well below the 0.5% drop expected by the market and following a 0.1% decline in the previous month.
At the same time, data released by Destatis revealed a lower-than-expected German trade surplus in the same month. The trade balance fell to a EUR 14.9 billion surplus from May’s EUR 18.6 billion, well below the EUR 17.3 billion expected. The impact of these data on the Euro, however, has been marginal.

Technical Analysis: EUR/USD bulls are back in control

EUR/USD is under an increasing bullish momentum after breaching the resistance at 1.1600. The Relative Strength Index on the daily chart has crossed above 50.0. The 4-hour RSI is entering overbought territory, but there is scope for further appreciation, especially if US weekly Jobless Claims confirm the US labour market’s deterioration.

The next bullish targets are at the 1.1700-1.1710 area, where the 78.6% Fibonacci retracement of the late-July sell-off meets July 23 and 25 lows, and the trendline resistance at 1.1745. Bulls are expected to meet significant resistance in those areas. Further up, the 24 July high at 1.1790 would come into focus.

Immediate support is at the previous 1.1590 resistance area (August 3 and 4 highs) ahead of the August 5 low at 1.1530. Further down, the July 31 high at 1.1460 and the August 1 low at 1.1400 would come next.