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A higher-than-expected unemployment rate in the US can significantly impact the USD/EUR exchange rate by influencing investor sentiment and monetary policy expectations. When unemployment rises, it typically signals economic weakness, leading to a decline in confidence in the US dollar. Investors may react by selling off USD assets, which can result in the dollar depreciating against the euro. This depreciation occurs as traders anticipate that the Federal Reserve might respond to the worsening labor market conditions by cutting interest rates to stimulate economic growth. Lower interest rates tend to make a currency less attractive to investors seeking yield, further contributing to a weaker USD.

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