EUR/USD Bounces Off Monthly Lows After U.S. NFP, Services Data
The EUR/USD pair rallied on Friday, recovering most of the previous day’s losses after U.S. employment and services data cooled down jitters around Fed’s rate increases path.
At the time of writing, the EUR/USD pair is trading at the 1.0640 area, 1.15 % above its opening price. The shared currency managed to erase daily losses, which saw the pair bottoming at a one-month low of 1.0481, but remains poised to post the first weekly decline after six consecutive gains.
On the data front, the Eurozone harmonized consumer price index rose by 9.2% in the year to December, below the 9.7% increase expected.
Across the pond, the U.S. Bureau of Labor Statistics reported the U.S. economy added 223,000 jobs in December, beating the market consensus of 200,000 but decelerating from its previous reading of 256,000 (revised from 263,000). The unemployment rate dropped to 3.5% versus the 3.7% expected, despite a slight increase in the participation rate. Meanwhile, wage inflation, gauged by the Average Hourly Earnings, fell to 4.6% YoY from its previous reading of 4.8%.
Economic Activity data from the Institute for Supply Management (ISM) showed that the service sector in the U.S. is slowing down. The Services PMI decreased to 49.6 in December from its previous reading of 56.5, well below expectations of 55.1. The Services Employment and New Orders Indexes also showed poor results in the same period, printing at 49.8 and 45.2, respectively, both below consensus.
Expectations that the Fed could increase rates by 50 bps next meeting cooled down on Friday, weighing on U.S. Treasury bond yields and on the dollar. According to the WIRP tool, the odds of a 50 bps increase dropped to 24.3% from Thursday’s 37.4%. Next week, the U.S. consumer price index will be on investors’ radars, looking for confirmation price pressures have continued to ease.
From a technical perspective, the EUR/USD holds a short-term positive bias according to indicators on the daily chart, while the quick bounce from recent lows showed the bulls are not ready to give up.
Regarding technical levels, the following resistance points are seen at the 1.0700 mark, followed by the December highs at 1.0736. On the other hand, support levels line up at the 20-day simple moving average at 1.0610, followed by the broken descending trendline that reinforces the 1.0500 psychological level and then the one-month lows at around 1.0480.
At the time of writing, the EUR/USD pair is trading at the 1.0640 area, 1.15 % above its opening price. The shared currency managed to erase daily losses, which saw the pair bottoming at a one-month low of 1.0481, but remains poised to post the first weekly decline after six consecutive gains.
On the data front, the Eurozone harmonized consumer price index rose by 9.2% in the year to December, below the 9.7% increase expected.
Across the pond, the U.S. Bureau of Labor Statistics reported the U.S. economy added 223,000 jobs in December, beating the market consensus of 200,000 but decelerating from its previous reading of 256,000 (revised from 263,000). The unemployment rate dropped to 3.5% versus the 3.7% expected, despite a slight increase in the participation rate. Meanwhile, wage inflation, gauged by the Average Hourly Earnings, fell to 4.6% YoY from its previous reading of 4.8%.
Economic Activity data from the Institute for Supply Management (ISM) showed that the service sector in the U.S. is slowing down. The Services PMI decreased to 49.6 in December from its previous reading of 56.5, well below expectations of 55.1. The Services Employment and New Orders Indexes also showed poor results in the same period, printing at 49.8 and 45.2, respectively, both below consensus.
Expectations that the Fed could increase rates by 50 bps next meeting cooled down on Friday, weighing on U.S. Treasury bond yields and on the dollar. According to the WIRP tool, the odds of a 50 bps increase dropped to 24.3% from Thursday’s 37.4%. Next week, the U.S. consumer price index will be on investors’ radars, looking for confirmation price pressures have continued to ease.
From a technical perspective, the EUR/USD holds a short-term positive bias according to indicators on the daily chart, while the quick bounce from recent lows showed the bulls are not ready to give up.
Regarding technical levels, the following resistance points are seen at the 1.0700 mark, followed by the December highs at 1.0736. On the other hand, support levels line up at the 20-day simple moving average at 1.0610, followed by the broken descending trendline that reinforces the 1.0500 psychological level and then the one-month lows at around 1.0480.