The US dollar is up sharply in early Wednesday (November 24th) morning currency trade following a strong unemployment report. The latest weekly report from the Labor Department for the week ending November 20th showed a seasonally adjusted total of 407,000 unemployment claims.

This much larger than expected drop of 34,000 claims from the previous week puts unemployment claims at their lowest weekly total since July of 2008.

Many analysts and investors are taking the news as a positive sign for the economy. However, some are quick to point out that the holiday season can be a volatile time for unemployment and that post-holiday employment data is more meaningful in presenting a glimpse of the future state of jobs.

While the dollar is up against most other major currencies following the news, the greenback is hammering away at its European counterpart. One euro touched a fresh two-month low of $1.3283 in early Wednesday morning currency trade.

After a modest rebound, the euro currently nets $1.3389. This marks a sharp decline from the start of the week when the euro was approaching $1.38. One euro netted as much as $1.42 in early November.

Debt worries are heating up in the euro-zone as investors that hold bonds in Spanish and Portugal appear unwilling to compromise on premium expectations in lieu of Ireland’s increasing debt burden.

Germany stepped in to lead an assistance effort for Spain, Greece and Portugal this summer that showed support for the European Union community.

However, with the expense of paying premiums on bonds, it is more difficult for the stronger EU members to jump in to assist Ireland.

Ongoing debt worries and consistent repeats of Wednesday’s positive jobs news should product a weaker euro-dollar as 2010 winds down and 2011 begins. When the state of the US economy shows clear signs of recovery, a likely move by the Fed to raise rates would be an even greater pro-dollar catalyst.