EUR/USD climbs to six-week high as ECB cuts interest rates, US Jobless Claims disappoint

• EUR/USD extends its gains, reaching its highest level since April 22 on Thursday.
• The ECB cuts its key interest rate by 25 bps, signaling a data-dependent approach moving forward.
• US Initial Jobless Claims rise to 247,000, adding pressure on the US Dollar ahead of the May NFP report due on Friday.

The Euro (EUR) edges higher against the US Dollar (USD) on Thursday, following choppy price action, as traders react to the European Central Bank's (ECB) widely expected interest rate cut and disappointing US Initial Jobless Claims, which weigh on the Greenback.

At the time of writing, EUR/USD extends gains, trading around 1.1480 during the American session -- a level last seen on April 22. The Euro's upward momentum comes as the US Dollar softens across the board, with the US Dollar Index (DXY), which tracks the Greenback's performance against a basket of six different currencies, edging lower toward 98.50. The US Dollar remains under pressure after US Initial Jobless Claims rose more than expected in the week ending May 31, reinforcing dovish expectations for the Federal Reserve (Fed) and further tilting the short-term bias in favor of the Euro.

The European Central Bank (ECB) has cut its interest rates by 25 basis points (bps) on Thursday, lowering the Rate On Deposit Facility to 2.00% and the Main Refinancing Operations Rate to 2.15%. This marks the seventh consecutive cut - the eighth since the central bank started the current easing cycle in June last year -  aimed at supporting the Euro area economy amid easing inflation and global trade uncertainties.

The ECB's updated projections indicate that headline inflation is expected to average 2.0% in 2025 and 1.6% in 2026, with real Gross Domestic Product (GDP) growth anticipated at 0.9% in 2025 and 1.1% in 2026. ECB President Christine Lagarde emphasized a data-dependent, meeting-by-meeting approach to future monetary policy decisions, refraining from pre-committing to a specific rate path.

In the US, Initial Jobless Claims unexpectedly rose to 247,000 in the week ending May 31, up from 240,000 the previous week and defying forecasts for a drop to 235,000. The unexpected rise points to emerging softness in the labor market and added pressure on the US Dollar, as traders look ahead to the highly anticipated May Nonfarm Payrolls (NFP) report due on Friday for further monetary policy clues by the Fed.