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EUR/USD Exchange Rate Ticks Down as German Unemployment Rises

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EUR/USD Exchange Rate Dips amid Uptick in German Unemployment

The Euro US Dollar (EUR/USD) exchange rate is drifting lower today, as data showed a rise in German unemployment.

At the time of writing, the EUR/USD exchange rate is trading at around €1.0928, roughly down 0.2% from this morning opening rate.

Euro (EUR) Dented amid Rise in German Unemployment

The Euro (EUR) is trending lower today, on the back of Germany’s latest jobs report.

December’s unemployment rate came in at 5.9%, rising slightly from November’s revised figure of 5.8%, in line with market predications.

This is the highest unemployment rate reported in the country since May 2021, and the eleventh month of consecutive increase.

Andrea Nahles, the agency’s chair, commented:

‘If we look back at 2023, we can see that the weak economy has left its mark on the labour market — however, considering the extent of the stress and uncertainty, the labour market is still holding up well.’

Signs of a slowing labour market in the Eurozone’s largest economy, acted as a headwind for the Euro as it stokes speculation that the European Central Bank (ECB) may need to cut interest rates earlier than it previously thought.

US Dollar (USD) Subdued ahead of Fed Minutes

The US Dollar (USD) is trading in narrow range today, as several important data releases are expected.

In the evening, we can expect to see the Federal Reserve’s minutes from their latest policy meeting, and before that, the US ISM manufacturing PMI and JOLTs job openings data.

The highly anticipated Fed meeting minutes will be closely examined by markets, as any dovish commentary from policymakers could stoke speculation the Fed will begin cutting interest rate as soon as March.

Both manufacturing PMI and job openings are forecast to increase, which could lend the ‘Greenback’ some support this afternoon should they print as expected.

However, their impact on the US Dollar may ultimately be limited as Fed minutes are likely to dictate USD movement this evening, and possibly into tomorrow.

EUR/USD Forecast: Eurozone CPI to Underpin Euro?

Looking ahead, EUR/USD movement may be impacted by the release of Eurozone’s latest consumer price index.

December’s preliminary figures are expected to report that headline inflation jumped from 2.4% up to 3%. Such a sharp rise in inflation could encourage the ECB to leave interest rates on hold and is likely to bolster the Euro.

On the other side of the Atlantic, the US Dollar could see some volatility in the latter stages of the week, as Friday brings with it the latest US non farm payroll report.

The data is expected to report a slowing of employment growth in the US in December.

Another sign that the US labour market is cooling is likely to drag on the US Dollar as it makes it more likely the Fed will pursue a rate cut in March.