The EUR/USD currency pair traded slightly higher, above 1.0400 in the American session on Friday, buoyed by thin trading volumes in a holiday-shortened week. The pair struggles to establish a clear directional bias with limited fundamental drivers.

On the European front, ECB Governing Council member Boris Vujcic recently reiterated expectations for further rate cuts in line with economic projections. The European Central Bank has lowered rates four times this year, bringing the deposit rate to 3.0%. Analysts anticipate continued quarter-point reductions until the rate reaches 2.0% by mid-2025. This outlook could exert further downward pressure on the euro.

In the US, labor market data released on Thursday painted a resilient picture. Initial Jobless Claims fell to 219,000 for the week ending December 21, down from the previous week’s 220,000 and below market expectations of 224,000. The data suggests underlying strength in the labor market, supporting the case for the Federal Reserve to adopt a cautious approach to monetary easing.

Meanwhile, the US Dollar Index (DXY) holds steady at 108.10, just below its recent two-year high. The Fed’s commitment to slowing the pace of rate cuts in 2025 underpins the greenback, limiting the euro’s gains against the US dollar.

Trade Idea
A break above 1.0430 could trigger a short-term rally toward 1.0465. Conversely, failure to hold above 1.0400 may lead to a test of 1.0370 support.