EUR/USD holds ground around 1.1650 as markets eye US PMI release

• EUR/USD trades muted around 1.1650 on Thursday, consolidating as markets digest Eurozone PMI data and US labor figures.
• The US-EU trade framework has been unveiled, capping most tariffs at 15% with major commitments in energy, technology, and investment.
• US Initial Jobless Claims climbed to 235K, an eight-week high, adding to signs of a softening labor market.

The Euro (EUR) is trading with a muted tone against the US Dollar (USD) on Thursday, holding steady around 1.1650 as markets digest the latest US labor data and await fresh business activity figures. Price action remains subdued, with investors weighing stronger Eurozone fundamentals against lingering US growth concerns.

Euro supported by US-EU trade pact and PMI data

On the European side, sentiment improved after the United States and the European Union unveiled a long-awaited joint trade framework late Wednesday. The pact caps most tariffs at 15%, while U.S. auto duties remain at 27.5% until the EU enacts reciprocal tariff reductions. As part of the deal, the EU committed to purchase $750 billion in US energy supplies and $40 billion in AI chips by 2028, while European firms pledged $600 billion in investments across strategic U.S. sectors. The agreement also touches on digital trade, regulatory alignment, and sustainability, providing the Euro with a medium-term support base by strengthening industrial demand and transatlantic economic ties.

Economic data from Thursday added to the Euro's support. The Eurozone HCOB Composite PMI (August preliminary) improved to 51.1, above the forecast of 50.7 and up from 50.9 in July. Manufacturing returned to expansion at 50.5 after months below 50, while services eased slightly to 50.7 from 51.0 in July but remained in growth territory. The numbers point to a gradual recovery across the bloc, particularly in the industrial sector.

US Dollar weighed by jobless claims, PMI awaited

"On the US side, labor market data surprised to the downside. Initial Jobless Claims rose to 235,000 in the latest week, above expectations of 225,000 and the prior 224,000, marking an eight-week high. The release adds to recent signs that the labor market is gradually softening.

Despite the weaker-than-expected labor data, the US Dollar Index (DXY) is holding firm near one-week highs around 98.34, reflecting cautious demand for the Greenback. Traders are now awaiting the release of the S&P Global PMI surveys later on Thursday, which will provide fresh insight into business activity trends.