Euro Pulls Back After Strong Eight-Day Rally as Traders Brace for Key US and Eurozone Data

The euro slipped slightly against the US dollar on Thursday, pausing after an eight-day winning streak as investors reassessed market sentiment ahead of major economic releases. The pair retreated from its earlier highs near 1.1660—the strongest level since mid-October—pressured by a mild rebound in the US Dollar and mixed data from the Eurozone.

Despite the pullback, broader market momentum still leans in favor of the euro. Expectations for another Federal Reserve rate cut next week continue to cap the dollar’s upside, with markets firmly pricing in a 25-basis-point reduction at the December 9–10 FOMC meeting. Recent weaker US data and cautious commentary from Fed officials about labor-market softness have reinforced dovish expectations. According to market projections, rate cuts may extend into early 2026, potentially lowering the Fed Funds Rate toward the 3.25%–3.50% range.

Fresh labor-market indicators from the US offered some relief but did little to shift the overall policy outlook. Announced layoffs plunged in November, and initial jobless claims fell more than expected, signaling near-term stability in employment. Still, traders remain focused on Friday’s release of the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge—which could shape expectations heading into next week’s pivotal policy meeting.

On the European side, newly released Retail Sales figures painted a mixed picture. Monthly sales stagnated in October, falling short of expectations, but annual growth ticked slightly higher. Traders will be watching upcoming Eurozone employment and GDP updates for clearer direction.

The next 24 hours promise heightened volatility as both regions release data that could influence central bank decisions. For now, EUR/USD consolidates after its impressive rally, with traders weighing a cautiously stronger dollar against growing confidence in a dovish turn from the Federal Reserve.

Overall, the pair appears set for a data-driven finish to the week, with inflation, spending, sentiment, and growth figures all poised to steer market sentiment heading into the final Fed meeting of the year.