Cooling Labor Market Fuels Rate Cut Bets; Tesla Hits Record on Robotaxi Optimism

The EUR/USD pair slipped early on Wednesday amid renewed US Dollar demand. The pullback follows a sharp retreat from last week’s highs, though downside pressure appears limited as broader fundamentals continue to favor the euro.

The US Dollar has struggled to extend its post-NFP rebound as dovish Federal Reserve expectations persist. Although November payrolls beat forecasts, a rise in the unemployment rate signaled cooling labor market conditions, reinforcing expectations of at least two Fed rate cuts next year and limiting USD upside.

On the euro side, the single currency continues to draw support from growing confidence that the European Central Bank has concluded its rate-cutting cycle. The ECB is widely expected to keep interest rates unchanged at Thursday’s policy meeting, with the key deposit rate having remained steady at 2% since July.

Despite the supportive backdrop, traders remain cautious ahead of several high-impact events. In addition to the ECB decision, markets are awaiting US Consumer Price Index data on Thursday, which could significantly influence near-term USD direction. In the meantime, attention turns to Wednesday’s final Eurozone CPI reading for further insight into regional inflation trends.

Bitcoin is trading near the $87,000 mark early on Wednesday, stabilizing after modest losses earlier in the week as persistent outflows from US-listed spot exchange-traded funds and uncertainty surrounding the Federal Reserve’s interest-rate outlook kept investors cautious.

Selling pressure has been reinforced by continued net outflows from US spot Bitcoin ETFs, extending a recent trend that has raised concerns about softening institutional demand.

Broader crypto sentiment has also been influenced by recent US economic data, which offered mixed signals on the health of the labor market.

As policymakers continue to balance easing employment conditions against inflation that remains above target, uncertainty around the timing and pace of future rate reductions has weighed on risk-sensitive assets, including cryptocurrencies. Markets are now looking ahead to the release of US inflation data on Thursday for further direction.

Oil prices jumped in early Asian trading on Wednesday after US President Donald Trump announced a blockade targeting sanctioned oil tankers traveling to and from Venezuela, providing a sharp rebound from multi-year lows reached in the previous session.

The rebound follows a steep selloff on Tuesday that pushed both Brent and WTI to low levels, as markets grappled with mounting concerns over a potential global supply surplus next year.

In a social media statement, President Trump said he had ordered a “total and complete blockade” of all sanctioned oil tankers entering or leaving Venezuela, while also designating the government of President Nicolás Maduro as a foreign terrorist organization. The move marks a further escalation in US pressure on the South American nation, which Washington has accused of facilitating drug trafficking and illegal migration.

Despite the sharp bounce, oil prices remain under broader pressure as traders continue to focus on the prospect of a sizable supply glut in 2026. Industry forecasts point to rising global inventories driven by record US production, steady output from OPEC+ producers, and slower demand growth, particularly in China.

On the data front, the American Petroleum Institute reported a much larger-than-expected decline in US crude inventories last week, with stocks falling by 9.3 million barrels. However, gasoline inventories rose by 4.8 million barrels and distillate stocks increased by 2.5 million barrels, signaling softer demand for refined fuels.

US equity markets ended mixed on Tuesday as investors digested a set of uneven labor market readings that renewed concerns about the health of the US economy. Losses in the broader market were partly offset by strength in select technology and AI-related stocks.

US payrolls rose more than expected in November, but a jump in the unemployment rate to a four-year high signaled cooling labor market momentum. The data was not weak enough to alter the Federal Reserve’s cautious, data-dependent stance, while flat US retail sales added to signs of slowing economic activity ahead of key inflation data.

Investors are also closely watching developments around Federal Reserve leadership, after reports indicated that President Donald Trump has narrowed his shortlist for the next Fed chair to former Governor Kevin Warsh and National Economic Council Director Kevin Hassett.

Tesla shares rose to a record closing high, buoyed by optimism surrounding the company’s robotaxi ambitions. Chief Executive Elon Musk confirmed that Tesla has been testing autonomous vehicles without safety monitors in the front passenger seat following the launch of limited robotaxi services in Austin earlier this year.

Oracle rebounded from recent losses as investors stepped in to buy the dip in AI-linked stocks, despite lingering valuation concerns across the sector.

Pfizer shares fell sharply after the drugmaker issued 2026 earnings guidance that fell short of market expectations, while homebuilder Lennar remained in focus ahead of its earnings release after previously reporting a sharp drop in quarterly profit amid housing affordability challenges.