• US Initial Jobless Claims surge, sparking EUR/USD rally, Treasury yield slump.
• Technical recession in Eurozone overshadowed by hawkish ECB signals.
• Traders eye June 13 US inflation data, FOMC meeting.

EUR/USD soars sharply past the 1.0750 area on Thursday after less stellar jobs data in the United States (US) weakened the US Dollar (USD). That said, the EUR/USD is trading at around 1.0770s after hitting a daily low of 1.0692.

Euro thrives as US Dollar sags weight of soaring jobless claims.

Before Wall Street opened, the EUR/USD climbed on the back of data the US Bureau of Labor Statistics (BLS) revealed. Initial Jobless Claims for the week ending June 3 rose by 261K, up from 232K foreseen by analysts, the highest level since October 2021. That adds to an outstanding Nonfarm Payrolls report last Friday, which showed the economy created 339K jobs, but the rise in the Unemployment Rate was a prelude to the previous week’s data.

EUR/USD reacted upwards, while US Treasury bond yields exerted downward pressure on the greenback. The US 10-year benchmark note rate tumbled seven and a half basis points so far, down at 3.20%, as traders remain optimistic the Federal Reserve (Fed) will not hike rates at the June meeting. The CME FedWatch Tool odds for a 25 bps increase in June are 52%, up from yesterday’s 50.9%.

The US Dollar Index, which measures the performance of a basket of six currencies vs. the buck, collapses by 0.73% at 103.345.

Across the pond, the Eurozone (EU) economy fell into a technical recession, according to Q1 2023, with the Gross Domestic Product (GDP) sliding 0.1% QoQ, unchanged compared to last year’s Q4. On year-over-year data, the EU’s economy slowed to 1% from 1.2% consensus, below the latest quarter of 2022 reading of 1.8%.

Despite the report, recent hawkish commentary by European Central Bank (ECB) officials led by its President Christine Lagarde keeps traders eyeing a 25 bps hike in June and July. Klas Knot, the President of the Dutch central bank and ECB member commented on Wednesday that at least two more walks are needed, and then the ECB could become data-dependent