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Dollar Holds Steady Ahead of Key Payrolls Report; Euro Stable Following ECB Cut

In early European trading on Friday, the U.S. dollar maintained stability as market participants eagerly anticipated the release of crucial U.S. employment data, while the euro found its footing following the European Central Bank’s historic rate cut.

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As of 05:00 ET (09:00 GMT), the Dollar Index, gauging the greenback against a basket of six other currencies, remained unchanged at 104.060.

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The Dollar Awaits Monthly Jobs Report

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The dollar has experienced some pressure throughout the week, with the index showing a 0.5% decline thus far, primarily driven by easing labor market conditions in the United States, which have bolstered expectations for Federal Reserve rate cuts later in the year.

Thursday’s release of weekly jobless claims, slightly surpassing the previous week’s upwardly revised figure of 221,000, further supported the prevailing market narrative suggesting a gradual easing of labor market tightness.

Attention now turns to the eagerly awaited monthly jobs report.

Forecasts suggest that the world’s largest economy may have added 185,000 jobs in the previous month, slightly surpassing April’s figure of 175,000, which marked the smallest gain in six months. Moreover, the unemployment rate is anticipated to have sustained its position below 4% for the 28th consecutive month.

The forthcoming employment report holds the potential to confirm whether the economy is experiencing a slowdown, should it demonstrate a continued deceleration in job creation. Conversely, an unexpected positive outcome could trigger a notable uptick in the value of the dollar.

Market expectations currently imply nearly 50 basis points of Federal Reserve rate cuts over the course of this year, with the initial reduction anticipated to materialize in September.

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