EUR/USD continues to decline for the third consecutive day this week, decreasing approximately 0.10% as the Greenback strengthens following a robust Purchasing Managers Index report from the ISM, coupled with a strong jobs report. Meanwhile, inflation has slowed in the Eurozone, staying close to the European Central Bank’s target and impacting the shared currency. The pair is currently trading at 1.1677, indicating a potential daily close beneath 1.1700.
EUR/USD continues to decline as the ISM Services PMI and strengthening US employment figures bolster demand for the Dollar. Eurozone inflation reaches the ECB’s 2% target, diminishing the need for policy adjustments and putting pressure on the Euro. Market participants are closely monitoring Eurozone sentiment data alongside US Job Cuts and Jobless Claims for new directional insights.
> The Euro has declined below the 1.1700 mark, as positive US PMIs and strong employment data overshadow the weaker figures from the Eurozone : The Dollar gained favor following the ISM Services PMI report for December, which exceeded expectations and signaled an increase in business activity within the services sector. According to the Department of Labor, job openings have decreased; however, a prior report indicated that hiring at US companies experienced modest growth in December, showing an improvement from November’s figures. In Europe, the Harmonized Index of Consumer Prices in the bloc reached the ECB’s 2% target on an annual basis, while the underlying HICP remained somewhat elevated. The disappointing German Retail Sales in November exerted pressure on the Euro, which declined to new two-day lows of 1.1672. In light of the US data, the US Dollar strengthened, as indicated by the US Dollar Index. The DXY, which assesses the dollar’s performance against six currencies, increased by 0.14% to 98.73, presenting a challenge for the EUR/USD. Meanwhile, the focus of traders shifts to upcoming data releases. In Europe, market participants will focus on the Eurozone Consumer Confidence, Business Climate, Economic Sentiment, and the Producer Price Index. In the United States, the upcoming schedule includes December’s Challenger Job Cuts and Initial Jobless Claims for the week ending January 3.
Latest FX Rate Trends: Strong US services PMI leads to a decline in the Euro
- The Institute for Supply Management reported that the ISM Services PMI surged in December, indicating a robust uptick in activity within the services sector. The index surged from 52.6 to 54.4, surpassing the anticipated figure of 52.3. The report indicates that the Employment subcomponent has shifted back to expansion, increasing from 48.9 to 52.0, which is a positive development for Federal Reserve officials. Meanwhile, Prices Paid eased modestly from 65.4 to 64.3, indicating a potential moderation in cost pressures despite robust demand.
- Simultaneously, the US Department of Labor published the November JOLTS report, indicating a decrease in job openings to 7.146 million from 7.449 million in October, suggesting a gradual easing in labor demand.
- Recently, the ADP Employment Change report indicated that private payrolls rose by 41,000 in December, falling short of the anticipated 47,000. However, this marks a significant improvement from November’s job losses of 29,000, hinting at a possible stabilization in hiring as the year concludes.
- In Europe, the EU HICP increased by 2% year-over-year in December, aligning with expectations, and showing a deceleration from the 2.1% recorded in November. On a monthly basis, inflationary pressures increased by 0.2% following a deflation of 0.3% in the prior month.