German Unemployment Dips 1k in June, Rate Steady at 6.3%

The bigger driver for EUR/USD remains the US calendar. Thursday’s CPI print will feed directly into expectations for the Federal Reserve’s next move. A soft number would lift the case for a September cut, pushing EUR/USD toward the 1.0900 resistance. A hot print would firm the dollar, testing support at 1.0800. The next Fed meeting follows a week later.

Alongside the US data, French political risk continues to weigh on the euro. President Macron’s snap election has added a risk premium to French government bonds, and that premium spills over into the single currency. The spread between French OATs and German Bunds remains elevated. A stable German jobs report does nothing to revive the narrative of a eurozone-wide slowdown that might justify a weaker euro on fundamentals alone.

The market’s focus will shift to German industrial production on July 8. That release will give a cleaner read on the manufacturing side of the economy. Until then, the labour market is a placeholder. “We are watching the second half of the year for any acceleration in the deterioration,” one Frankfurt-based trader said. “The June data does not change the roadmap.”

Traders who are short EUR/USD on the French risk premium are likely to hold positions through the CPI print. A break below 1.0780 would confirm a new leg lower, while a hold above 1.0800 keeps the pair in its recent consolidation range of roughly 1.0800-1.0900. The German labour report does not offer a catalyst for either side.