EUR/USD drifts lower ahead of Eurozone GDP and US CPI data releases

• EUR/USD extends losses to 1.1855 from weekly highs at 1.1928.
• Concerns about AI's disruption of the labour market have soured market sentiment.
• Eurozone preliminary GDP and US CPI data will set the pair's direction on Friday.

The Euro (EUR) is trading lower against the US Dollar (USD) for the fourth consecutive day on Friday, changing hands at 1.1855 at the time of writing, down from its weekly high of 1.1928. Renewed concerns about AI have crushed market sentiment ahead of the releases of the Eurozone's Preliminary Gross Domestic Product (GDP) and the US Consumer Price Index (CPI), due later on Friday.

Investors’ fears about AI's negative impact on the labour market triggered another decline on Wall Street, after Microsoft AI CEO Mustafa Suleyman told The Financial Times that all white-collar jobs would be replaced in the next 12 to 18 months.

The UD Dollar picks up in risk-off markets

The risk-off mood extended through the Asian session, providing some support to the safe-haven US Dollar, and offsetting Thursday's downbeat macroeconomic data. US Initial Jobless Claims fell by 5K but remained at high levels, at 227K, and above the 222K expected. Beyond that, Existing Home Sales fell by 8.4% in January, feeding concerns about the strength of the US economy.

Market movement, however, remains subdued, with traders awaiting the release of January’s US CPI figures for further insight into the Federal Reserve’s (Fed) monetary policy plans. Headline inflation is expected to have eased to 2.5% year-on-year, from 2.7% in December, with the core inflation down to 2.5% from 2.6% in the previous month.

Before that Eurozone’s Preliminary GDP will show the picture of the region’s economic performance in the last quarter of 2025. The Eurozone’s economy is expected to have grown at a steady 0.3% pace in the quarter and slow down to a 1.3% annualized rate, from 1.4% in Q3.