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5 Jan 2024

EUR/USD hits three-day high near 1.1000 on mixed US economic data

  • EUR/USD climbs to 1.0960, buoyed by solid US jobs report and sharp slowdown in ISM Services PMI.
  • Eurozone inflation eases, sparking speculation about potential ECB rate adjustments and impacting EUR/USD dynamics.
  • Pair's retreat to 1.0970 area follows profit-booking post-surge, as markets digest varied economic indicators.

The EUR/USD rallied to a three-day high on Friday after the latest US jobs data announced by the US Bureau of Labor Statistics (BLS) was solid, sponsoring a dive to a new three-week low at 1.0876. Recently, the ISM Services PMI in December slowed sharply, clinging to expansionary territory, sponsoring a leg-up in the major, which is posting gains of more than 0.30%.

EUR/USD rallied towards 1.0998 after the release of the ISM Services PMI

The US Bureau of Labor Statistics (BLS) revealed the economy added 216K, as depicted by December’s Nonfarm Payrolls data, while the Unemployment Rate cooled from 3.8% to 3.7%. Digging a little deep in the data, Average Hourly Earnings rose to 4.1% YoY from 3.9%. After the data, the EUR/USD climbed to 1.0960.

Lately, the Institute for Supply Management (ISM) revealed that the Non-Manufacturing PMI cooled from 52.7 to 50.6, its lowest reading since May 2023, blamed by a drop in a measure of employment plummeting to its lowest level in 3 and a half years. The ISM Services Employment Index dropped from 50.7 to 43.3. That sponsored the EUR/USD most recent leg-up towards its daily high of 1.0998, but traders booked profits, with the pair retreating toward the 1.0970 area.

In the meantime, during the European session, inflation in the Eurozone (EU) jumped 2.9%, less than expectations of 3%. Core inflation decelerated from 3.6% to 3.4%, as estimated by analysts. The major dropped on speculations that the European Central Bank (ECB) would run out of excuses not to lower rates.

Next week’s economic calendar in the US will feature inflation data on the consumer and the producer side, along with the Initial Jobless Claims for the week ending on January 6.

EUR/USD Price Analysis: Technical outlook

The EUR/USD accelerated during the day but fell short of piercing the 1.1000 figure, sponsoring a pullback toward the 1.0960 area. The emergence of a golden cross suggests the pair is on a correction that could resume with the major testing the 1.1000 mark, followed by a test of a downslope resistance trendline drawn from April 2021 highs of 1,2260s, at around 1.1050. If cleared, buyers could lift the exchange rate to 1.1100. On the other hand, if sellers return, they could drag prices toward the 1.0900 figure, followed by the current year’s low of 1.0876.

 

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