EURUSD stays pressured toward 1.0900 key support as Eurozone inflation, US NFP loom

The first Friday of 2024 portrays typical pre-NFP inaction amid a light calendar in Asia. Adding importance to the day is the first reading of the Eurozone inflation and US Factory Orders, as well as the ISM Services PMI data. It should be observed that the increasing odds of witnessing lower rates in 2024 and a soft landing in the US, however, favored the market’s optimism, as well as put a floor under the US Dollar.

Amid the firmer US Dollar, the EURUSD remains depressed while the GBPUSD struggles for clear directions even as the economic concerns about the bloc and the UK are grim of late. That said, the JPY drops the most among the G10 currency pairs amid firmer yields whereas the Antipodeans edge lower.

Elsewhere, Wall Street closed mixed but the Asia-Pacific shares edged lower amid mixed concerns about China.

In the case of commodities, Crude Oil picks up bids to reverse the previous day’s losses while the Gold price stays defensive, bracing for the first weekly loss in four.

BTCUSD and ETHUSD both print mild losses as optimism about the spot ETF approvals fades amid the US SEC’s meetings with the exchanges.

Following are the latest moves of the key assets:

• Brent oil remains mildly bid around $78.00 while paring the previous day’s losses.
• Gold price struggles to defend Thursday’s rebound from 21-SMA near $2,045 at the latest.
• USD Index rises 0.15% intraday to around 102.50 as we write.
• Wall Street closed mixed but the Asia-Pacific stocks edged lower. However, equities in the UK and Europe remain mildly offered during the initial hour.
• BTCUSD and ETHUSD remain pressured around $43,850 and $2,260 respectively.

US Dollar eased earlier despite upbeat data, markets remain jittery…

The US Dollar Index (DXY) braces for the first weekly gain in four, eyeing the best week in eight months so far, as chatters about the Fed rate cuts take a back seat while the US soft-landing concerns gain momentum. Also likely to have helped the Greenback are the recently firmer US data.

On Thursday, the US ADP Employment Change rose to a four-month high of 164K versus the market forecasts of 120K and a revised down prior of 101K. On the same line, the Initial Jobless Claims also eased to 202K from 220K prior, versus 216K expected.

Further, the final readings of the US S&P Global Services PMI for December improved to 51.4 from the initial estimations of 51.3 whereas the Composite PMI eased to 50.9 from 51.0 prior forecasts.

Elsewhere, the first readings of Germany’s inflation for December, per the Harmonized Index of Consumer Prices (HICP) measure, matched the market forecasts of 3.8% YoY compared to 3.2% prior but eased from 0.3% MoM estimations to 0.2%. Further, the inflation readings per the Consumer Price Index (CPI) gauge proved right the monthly forecasts of 0.1% for the said month, compared to -0.4% prior, whereas the yearly figures rose to 3.7% from 3.2%, versus 3.8% expected.

On a different page, the UK’s final readings of the S&P Global/CIPS Services PMI for December rose past 52.7 initial estimations to 53.4 while the Composite PMI also improved to 52.1 from the flash forecasts of 51.7.

Additionally, Japan’s Jibun Bank Services PMI for December eased to 51.5 from 52.0 but the Consumer Confidence Index for the said month improved to 37.2 from 36.1.

Prices of crude oil failed to cheer a pullback in the US Dollar as the official US oil inventory data from the Energy Information Administration (EIA) marked a lesser draw in the stockpile for the week ended on December 29. That said, the EIA Crude Oil Stocks Change eased to -5.503M from -7.114M, versus -3.725M market expectations.

It’s worth noting that Politico unveiled news citing three U.S. officials with direct knowledge of the discussions while stating that the military is drafting plans to hit back at Iran-backed Houthi militants who have been attacking commercial shipping in the Red Sea. The news will challenge the sentiment and allow the price of Oil and the US Dollar to edge higher.

• Strong buy: USDCAD, USDJPY
• Strong sell: Crude Oil, US Dollar, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

A slew of US/EU data eyed for clear directions…

Moving on, the top-tier employment data from the US and Canada will join the first readings of the Eurozone inflation numbers, as well as the US Factory Orders and ISM Services PMI, to entertain the market players. While likely softer prints of the US data may allow traders to pare recent gains of the US Dollar, positive surprises won’t hesitate to renew bullish bets on the Greenback. It’s worth noting that the firmer outcomes of the bloc’s inflation may not impress the EURUSD bulls, unless US data disappoints too much, a softer inflation in the old continent could drag the quote beneath the 1.0900 key support.

May the trading luck be with you!