EURUSD drops as U.S. unemployment claims decline and German business sentiment shows mixed signs

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.43%	-49 Pips
Week to-date	1.08%	121 Pips
May	-0.36%	-40.3 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In the United States, the initial unemployment insurance claims for the week ending May 17 showed a marginal decrease to 227,000 from the previous figure of 229,000, according to the Department of Labor. This slight drop in unemployment claims suggests a continued, albeit slow, improvement in the U.S. labor market. Such data typically reflects on the overall economic health, indicating that fewer people are losing jobs and might infer potential stability or growth in consumer spending and confidence.

Turning to Germany, the ifo Institute reported an increase in the ifo Expectations Index for May 2025, which rose to 88.9 points from 87.4 in April. This improvement indicates that German businesses are more optimistic about the future economic conditions. However, the ifo Current Assessment decreased slightly to 86.1 points from 86.4 points, showing a mixed sentiment about the current economic situation. Despite this, the overall ifo Business Climate Index increased to 87.5 points from 86.9 points, suggesting that the business sentiment is cautiously improving, yet firms highlight concerns over current conditions.

For the EURUSD, the pair dropped by 0.43% to 1.12791, indicating some weakness for the euro against the U.S. dollar. The recent economic data contributes to painting a picture of modest growth and recovery in Germany contrasted against stable labor conditions in the United States. This slight advancement in U.S. employment figures, coupled with mixed yet slightly optimistic German business outlooks, presents a complex landscape. Generally, positive U.S. economic data such as reduced unemployment claims tends to bolster the dollar, as investors perceive it as a testament to economic strength, which can have bearish implications for the EURUSD. On the other hand, inconsistent yet improving German economic indicators might not be strong enough to offer significant support for the euro. Without major economic events lined up, the EURUSD might stay in a consolidation phase as investors weigh these nuanced indicators from both economies.

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What can we expect from EURUSD today?

EURUSD on Thursday dropped -0.43% to 1.12791. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.12414 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.13450 or trades above daily pivot 1.12932. Break above could target R1 at 1.13309. While to the downside, we are looking at 1.12414 (S1) and daily low of 1.12555 as support levels. EURUSD need to break on either side to indicate a short-term bias. A close below 1.12555 would indicate selling pressure.

For the week to-date, take note that EURUSD is bullish as the pair continued to trade higher and is up by 1.08% over the past few days.

Key levels to watch out:

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