EUR/USD dips below 1.14, focus on US unit-labor costs

EUR/USD again sees a shallow bounce from the 200-week MA.
A below-forecast German factory orders print may bolster fears of a deeper economic slowdown in Eurozone.
A strong US unit-labor costs data may revive Fed rate hike talk, sending the USD higher across the board.

Omkar Godbole FXStreet Contributor

EUR/USD is currently trading just below 1.14, having clocked a high of 1.1514 last week.

The pair is increasingly looking heavy, having faced repeated rejection at 1.15, despite the persistent defense of the 200-week moving average (MA) over the last six months.

The 10-week moving average (MA), currently at 1.1386, could be breached if the German factory orders for December, due at 07:00 GMT, miss expectations by a big margin, making Germany more vulnerable to a recession.

Focus on US unit-labor costs

The unit-labor costs are forecast to have risen 1.7 percent in the fourth quarter, following a 0.9 percent rise in the third quarter.

Unit-labor costs are one of the key inflation numbers that the Federal Reserve monitors closely.

A weaker-than-expected print would validate Fed's patience on rate hikes and could put a bid under EUR/USD.

However, if the data matches or beats expectations, then markets may begin considering the possibility of a single 2019 rate hike. In that case, treasury yields will likely spike, lifting the greenback higher across the board.

EUR/USD pivot points

1. R3 1.1494
2. R2 1.1473
3. R1 1.1443
PP 1.1422
1. S1 1.1392
2. S2 1.1371
3. S3 1.1341

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD dips below 1.3350 with bullish momentum losing steam

The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair trades near 1.3340 at the time of writing, down from 1.3387 highs last week, although it maintains a near-term bullish trend intact.

EUR/USD clings to daily gains, still below 1.1450

EUR/USD manages to shrug off the initial bearish tone and advances toward the 1.1440-1.1450 band on Monday, up modestly for the day. Meanwhile, the pair’s mild gains comes on the back of the lack of clear direction in the Greenback in quite an apathetic start to the week.

Gold remains offered below $4,200

Gold comes under fresh downside pressure on Monday, reversing three daily upticks in a row and meeting some initial resistance around the $4,200 mark per troy ounce. Safe-haven demand has shifted toward the US Dollar as renewed tensions surrounding the Strait of Hormuz weigh on market sentiment, limiting the precious metal's upside.

XRP extends decline as risk-off sentiment, fading retail demand weigh

Ripple (XRP) sustains losses on Monday, edging lower toward the short-term $1.10 support. XRP failed to sustain momentum above $1.20 on the previous day, prompting profit-taking amid a broader crypto market drawdown attributed to mild inflows into related digital investment products, declining retail participation and macroeconomic uncertainty.

The US Dollar just beat the Swiss Franc at its own safe-haven game

As the king among safe havens, the Swiss Franc is supposed to benefit from geopolitical shocks such as the Iran war. This time, it didn’t. The Swissie is nearly 6% below January’s peak against the USD after a sharp decline that came along with the war in Iran and the closure of the Strait of Hormuz.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.