EURUSD drops 0.33% amid mixed economic indicators and strong US labor market data

EURUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.33%	-34 Pips
Week to-date	0.12%	12.7 Pips
January	-0.85%	-88.2 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In the United States, there was a notable improvement in the labor market as Initial Unemployment Insurance Claims decreased to 201,000 during the week ending January 4, compared to a previous figure of 211,000 as reported by the Department of Labor. Additionally, the U.S. job market exhibited positive signs with the Job Openings and Labor Turnover Survey (JOLTS) showing an increased number of job openings in November to 8.098 million from 7.744 million in October according to the Bureau of Labor Statistics.

The Euro Area saw varied economic indicators in December and November. The Business Climate Indicator (BCI) fell to -0.91 points, indicating worsening sentiment compared to -0.77 points in November, according to the European Commission. The Economic Sentiment Indicator (ESI) also declined to 93.7 points from 95.6. However, the Producer Price Index showed better results, with improvement rising to -1.2% from -3.2%. The Harmonized Index of Consumer Prices (HICP) increased to 0.4% from -0.3%, while the Core HICP rose to 2.8%, showing some inflationary pressures. Unemployment remained stable at 6.3% in November, as reported by Eurostat.

In Germany, economic data reflected mixed performance in November. New manufacturing orders dropped significantly to -5.4% from -1.5% in October, while unadjusted new orders showed a steep decline at -1.7%. Retail trade, however, showed improvements, as turnover increased to 2.5% from 1% in October, according to the Federal Statistical Office (Destatis).

Considering these economic data, the EUR/USD was affected with the rate dropping by 0.33% to 1.03180 on Wednesday. The decrease in the Euro reflects weaker economic sentiment and mixed economic indicators from the Euro Area, coupled with strong U.S. labor market data which increases the attractiveness of the U.S. dollar. The market’s perception of economic performance between the two regions could continue to weigh on the EUR/USD, particularly if upcoming U.S. economic data, such as the high-impact Nonfarm Payroll Employment report, further supports the dollar’s strength.

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What can we expect from EURUSD today?

EURUSD on Wednesday dropped -0.33% to 1.03180. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for EURUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 1.02747 with break below could see further selling pressure towards S2 at 1.02314. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.03575 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.02728 would indicate selling pressure.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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