EurUsd experiences gains as euro area takes easing stance amid rising US labor costs and declining productivity

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.23%	25.9 Pips
Week to-date	0.92%	104 Pips
June	0.92%	104 Pips

Upcoming key events (London Time)

Fri 10:00 AM EUR GDP (seasonally adjusted) (3-mth)
Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In the United States, Unit Labor Costs experienced a notable increase in the first quarter of 2025, rising to 6.6% from 5.7% in the last quarter of 2024. However, on a related front, Nonfarm Business Labor Productivity decreased further, plummeting from -0.8% in the final quarter of 2024 to -1.5% in the first quarter of 2025. Moreover, the Unemployment Insurance Claims revealed a slight uptick, with initial claims rising to 247,000 in the week ending 31 May, adjusted from a previously revised 239,000 by the Department of Labor. These indicators suggest increasing labor costs, but declining productivity with worsening employment statistics, which might weigh on economic growth prospects.

In contrast, the Euro Area reported a decrease in the ECB Interest Rate for main refinancing operations, dropping to 2.15% from 2.4%. This easing approach is accompanied by declining producer price indices. Specifically, in April 2025, the Producer Price Index decreased to -2.2% month-on-month and showed a drop to 0.7% annually from 1.9% the previous month. These statistics highlight the ECB’s response to mitigate declining inflationary pressures and stimulate economic activity. Germany also experienced variances in new manufacturing orders, with seasonally adjusted figures decreasing to 0.6% from 3.6% in March, while non-seasonally adjusted numbers rose to 4.8%, reflecting inconsistencies within the German industrial sector.

The mixed economic data from the U.S. and Euro Area could provide contrasting effects on the EURUSD exchange rate. The U.S. data points to increased labor costs without corresponding productivity gains, which could stoke inflationary pressures and might lead to tighter future monetary policy. On the other hand, the Euro Area’s easing stance through lower interest rates is aimed at boosting economic growth amid falling producer prices. The current rise in EURUSD by 0.23% to 1.14416 suggests that the market might perceive the combined effect of the Euro Area’s proactive measures and the U.S.’s current data as favoring the euro, especially in the short-term, with the anticipation of further economic data releases, such as the EUR GDP and U.S. Nonfarm Payroll, potentially adding new trends to this dynamic.

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What can we expect from EURUSD today?

EURUSD on Thursday rose 0.23% to 1.14416. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.14896 with break above could target R2 at 1.15377 or figure level area. While towards the downside, we are looking at daily low of 1.14043 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.14950 may suggest continuation after recent positive movement.

For the week to-date, take note that EURUSD is bullish as the pair continued to trade higher and is up by 0.92% over the past few days.

Key levels to watch out:

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