The U.S. dollar gained value versus a basket of key currencies as recent jobless claims data made a stronger case for the Federal Reserve to stop raising interest rates, but maintained a high bar for year-end rate reduction.

The number of Americans submitting new applications for unemployment benefits increased last week to the highest level since late 2021, indicating that the impact of higher interest rates on the labor market was beginning to become apparent.

The labor market remains tight, with 1.6 job openings for every unemployed person in March, well above the 1.0-1.2 range that is consistent with a jobs market that is not generating too much inflation.

U.S. producer prices, on the other hand, showed a moderate rise last month, posting the smallest annual increase in producer inflation in more than two years, further evidence that inflation pressures were easing. The producer price index for final demand rose 0.2% last month. In the 12 months through April, the PPI increased 2.3%. That was the smallest year-on-year rise since January 2021 and followed a 2.7% advance in March.

“For the dollar, I don’t think it meaningfully alters what’s already baked in,” said Joe Manimbo, senior market analyst, at Convera in Washington. “I think there’s a strong conviction that the Fed will pause rate hikes. But at the same time, we’re not seeing an airtight case for rate cuts to materialize by the end of the year.”

The dollar index , which tracks the U.S. currency against six major peers, was at 101.92, up 0.7%

The euro , which slipped to a three-week low following Chinese data showing more evidence of weakness in its post-COVID recovery, was last seen at $1.0904, down 0.6%.

“The dollar’s recovery remains intact as China weakness and the Bank of England’s cautious rate guidance overshadow signs of the U.S. labor market losing steam and inflation continuing to moderate,” said Manimbo.

Fed funds futures traders are pricing in a pause before expected rate cuts in September. The Fed’s target range stands at 5% to 5.25%.