On December 12, data released by the U.S. Labor Department showed that initial jobless claims surged to 236,000 for the week ending December 6, marking the highest increase since March 2020. This followed a prior week's reading of 192,000, which had been the lowest in nearly 60 years during the Thanksgiving holiday week. Notably, while initial claims spiked, continuing jobless claims dropped sharply to 1.84 million for the week ending November 29, hitting an eight-month low and recording the largest weekly decline in four years. Market interpretations of this sudden rise diverged, with Pantheon Macroeconomics suggesting accelerated layoffs, while High Frequency Economics maintained that claims remain historically low over a longer timeframe.

Meanwhile, expectations for the Federal Reserve's 2025 rate-cut trajectory remain divided. Most institutions, including Citi, Morgan Stanley, and JPMorgan, anticipate the first cut in January, with Citi projecting another in March, Morgan Stanley foreseeing a second cut in April, and JPMorgan expecting a subsequent policy pause. Goldman Sachs, Wells Fargo, and Barclays, however, predict the easing cycle to begin in March, potentially followed by another cut in June. In contrast, Standard Chartered maintains its view that no rate cuts will occur in 2025, noting that recent Fed communications have boosted risk sentiment without signaling a fundamental policy shift.

Key data to watch today include Germany’s November CPI final reading, the UK’s October GDP monthly figure, industrial production, and goods trade balance.

**Dollar Index** The dollar index fell to an eight-week low, trading around 98.30, pressured by the Fed’s dovish tilt and weak U.S. economic data, including the sharpest weekly rise in jobless claims in four and a half years. Resistance is seen near 98.80, with support at 97.80.

**EUR/USD** The euro climbed past 1.1700 to a 10-week high, now at 1.1740, supported by the Fed’s stance and soft U.S. data. ECB President’s optimistic remarks also bolstered the pair. Resistance is eyed at 1.1850, support at 1.1650.

**GBP/USD** Sterling edged up to 1.3400 as the dollar weakened, though BoE rate-cut expectations capped gains. Focus shifts to 1.3500 resistance and 1.3300 support.