Euro falls as strong US jobless claims support US Dollar
The Euro has weakened against the US Dollar following unexpectedly strong jobless claims data from the US, indicating less urgency for the Federal Reserve to cut interest rates. This backdrop supports USD carry trades while pressuring EUR/USD, pushing the pair closer to critical technical support levels. The market sees potential implications for the ECB’s rate trajectory as well, creating a risk-reward scenario favoring the Dollar in the near to medium term.
Where it sits in our coverage
Our consensus EUR/USD target is 1.1700 (median across firms), with Commerzbank at the upper bound (1.2000) and Citi at the lower (1.1300). The current spot price of 1.1434 reflects a market grappling with mixed economic signals, yet it remains below consensus, suggesting potential for upward adjustments if weakness persists.
How firms align
Goldman and JP Morgan project a 1.1800 target for March 2026, supporting a bearish view on the Euro as it aligns with the headline's sentiment. Notably, Citi adopts a more bearish position at 1.1300, indicating a longer-term view that compounds the current pressure on the Euro.
What the data shows
Recent forecasts reflect a general downward revision among firms, including Goldman, which adjusted its March target to 1.1800 from a previous estimate. Per our published insights (/research/eurusd-ecb-rate-path-2026-07-16), the market consensus remains significantly above the current trading level, reflecting a divergence that bears monitoring.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD tests technical support around 1.1430.
- 02US jobless claims bolster USD strength amid shifting Fed expectations.
- 03Client positioning should consider risk of a breach below 1.1400.
- 04Keep an eye on upcoming ECB comments for further EUR direction.
Market implications
Investors should watch the 1.1400 level closely, as a break could lead to further downside pressure on the Euro. The next major event is the ECB's upcoming meeting, where any signals of policy divergence could sway this pair significantly, potentially impacting our consensus target of 1.1700.
Risks to this view
A reversal in this bearish sentiment might occur if Eurozone economic indicators surprise positively or if the Fed signals a shift toward more accommodative policy. Additionally, a significant change in labor market dynamics in the US could lead to renewed interest in the Euro.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
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