USD weakens as jobless claims drop to 199K, below 220K forecast

The US dollar faced selling pressure following the release of better-than-expected jobless claims data, with initial claims dropping to 199K versus the 220K consensus estimate. The previous week's figure was 214K, while continuing claims also declined to 1.866M from 1.923M previously. Despite the positive labor market signals, traders remain cautious about the data's reliability due to typical holiday season volatility and potential for significant seasonal adjustments. The consistent decline over recent weeks suggests the labor market is tracking toward the lower end of its recent range, potentially limiting the Federal Reserve's urgency for aggressive monetary policy adjustments. USD pairs showed mixed reactions, with traders awaiting clearer signals from post-holiday normalized data. The strong employment figures could support dollar bulls in the medium term if the trend continues into January, though immediate market impact remains muted given seasonal considerations.