USD Resurgent: Strong Labor Data and "Trump QE" Squeeze EUR/USD Below 1.1600

The US Dollar asserted dominance across the board on Friday, driving EUR/USD to fresh yearly lows sub-1.1600. The Greenback's strength is being fueled by a dual narrative: a resilient labor market that defies recession fears, and unorthodox fiscal interventions by the White House.

Labor Market Resilience

US Initial Jobless Claims fell to 198,000, the lowest level since November 2024. This data point undermines the dovish pivot narrative, suggesting that despite high interest rates, companies are hoarding labor. For Federal Reserve Chair Powell—currently under political fire—this data validates a restrictive monetary stance.

The “Trump QE” Factor

Complicating the picture is the White House's direct intervention in the mortgage market. Recent bond-buying initiatives (labeled by markets as “Trump QE”) have successfully pushed the 30-year fixed mortgage rate down to 6.06%, a three-year low.

Forex Analysis

• EUR/USD: The pair's break below 1.1600 is technically significant, opening the door for further downside as the Eurozone economy continues to lag.
• USD/JPY: The pair is grinding higher toward 159.00, supported by widening yield differentials.

Analyst View

The market faces a paradox. The White House is easing financial conditions (via mortgage bond buys) while the economy runs hot. This increases the risk of re-accelerating inflation, which would force bond yields higher, ultimately acting as a powerful tailwind for the USD in the medium term.