EUR/USD held onto earlier gains of more than 0.20% after the European Central Bank (ECB) made headlines, cutting interest rates but leaving open the possibility of a pause at its upcoming July 24 meeting. At the time of writing, the pair was trading at 1.1441 after bouncing off a daily low of 1.1404.

The ECB decided to cut interest rates to 2%, as expected by market participants, although it had left open the possibility of a pause. The decision was not unanimous, with one dissenter, most likely Robert Holzmann, who, ahead of the meeting, had favored a cut after the June or July meeting.

In the statement, the ECB outlined its meeting-by-meeting path and updated its projections for growth and inflation. At a press conference, ECB President Christine Lagarde said that monetary policy was "well positioned" amid the current uncertain outlook, adding that the central bank was close to ending its easing cycle.

EUR/USD surged sharply to an intraday high of 1.1498 before retreating slightly to the current exchange rate level.

In the US, the US Bureau of Labor Statistics confirmed signs of a cooling labor market, as jobless claims rose with more people filing for unemployment insurance. Meanwhile, the US trade deficit narrowed in April, according to the Bureau of Economic Analysis, as businesses offloaded goods ahead of incoming tariffs.

Federal Reserve (Fed) speakers headlined the day, led by Governor Adriana Kugler and regional Fed Presidents Patrick Harker and Jeffrey Schmid. The greenback pared some of its earlier losses, as indicated by the US Dollar Index (DXY). The DXY, which tracks the dollar against a basket of six other currencies, was little changed at 98.75.

EUR/USD traders' eyes will be on US Nonfarm Payrolls figures, which are expected to drop to 130K in May from 177K. The Unemployment Rate is projected to remain unchanged at 4.2%. (alg)

Source: FXstreet