Investing.com – The U.S. dollar rose on Thursday, benefiting from solid jobs data as well as uncertainty from turmoil in the Middle East.

At 04:30 ET (08:30 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.2% higher at 101,597, just shy of its recent three-week high.

Good data from the labor market strengthens the dollar

The dollar gained after Wednesday’s report showing a larger-than-expected 143,000 job gain in the U.S. last month.

This followed Tuesday’s better-than-expected reading of the American currency and increased expectations for a good reading on Friday, which may result in a correction in the market’s assessment of the likely pace of easing monetary policy by the Fed.

“Year-end Fed funds valuations remain largely inclusive of a 50 basis point cut in November or December, implying room for further accommodation to less dovish Fed rhetoric and, consequently, upside risk for the dollar,” ING analysts said in a note .

“We sense that the bar for a negative dollar reaction to today and tomorrow’s U.S. data is likely higher following Fed Chairman Jerome Powell’s recent reaction against 50 basis point cuts.”

Following last month’s excessive Fed cut, the market now sees a roughly 37% chance of another 50 basis point U.S. interest rate cut on November 7, according to CME Group’s (NASDAQ:) FedWatch Tool.

The US safe and sound haven currency also saw demand amid escalating tensions in the Middle East following Iran’s ballistic missile attack on Israel.

The euro is weakening as inflation cools

In Europe, rates fell 0.1% to 1.1035 and the single currency retreated to a three-week low on further signs of weakening inflation in the euro zone.

Eurozone activity data was slightly better than expected in September, but data for the region remained in withering territory, according to data released earlier on Thursday.

The European Central Bank’s usually hawkish policymaker in a speech on Wednesday withdrew her long-standing warning about the difficulty of containing price increases, raising expectations for another interest rate cut later this month.

GBP/USD fell 1% to 1.3133, hitting a two-week low after the Bank of England governor said in an interview that the central bank could become “a little more activist” on interest rate cuts if they come more good news on inflation.

Yen falls to six-week low

rose 0.1% to 146.53, with the pair hitting a six-week high after Japan’s fresh prime minister expressed caution on the need for additional interest rate increases after a meeting with the central bank governor on Wednesday.

The Bank of Japan’s July meeting, published earlier this week, also showed that policymakers were divided on how quickly the central bank should continue to raise interest rates.

remained largely unchanged at 7.0185, with Chinese markets currently closed until Tuesday next week as the country celebrates Golden Week.