EUR/USD grinds below 1.0900 around nine-month high ahead of Eurozone/US PMIs
- EUR/USD picks up bids to reverse the previous day’s pullback from multi-day high.
- ECB hawks propelled prices in absence of Fed talks, softer US data adds to the US Dollar weakness.
- Preliminary readings of January month PMIs for Germany, Eurozone and US will be eyed for intraday directions.
EUR/USD stays firmer around 1.0870, despite late Monday’s retreat from a multi-day high, as the European Central Bank (ECB) hawks favor the pair buyers ahead of the key monthly activity data for the bloc, as well as for the US. Adding strength to the major currency pair’s upside momentum were the downbeat US statistics and market’s cautious optimism amid an absence of the Federal Reserve (Fed) policymakers’ speech due to the pre-Federal Open Market Committee (FOMC) blackout period.
ECB President Christine Lagarde’s comments suggesting further rate hikes to tame inflation were the latest to favor the EUR/USD bulls. However, major attention was given to ECB Governing Council Member Peter Kazimir who said, “I am convinced that we need to deliver two more hikes by 50 basis points." The idea of 50 bps rate hike was something that many policymakers have refrained in recent days.
On the other hand, softer prints of the US Conference Board’s Leading Index for December, to -1.0% versus -0.7% expected and -1. 1% prior, added weakness into the US Dollar.
It should be noted that an absence of Chinese players due to the Lunar New Year Holidays and receding fears of the strong recession in 2023 also seemed to have improved the market’s mood and favored the EUR/USD bulls.
Moving on, the EUR/USD buyers are likely to keep the reins amid cautious optimism and hawkish ECB commentary. However, the first readings of January’s activity data for Germany, the Eurozone and the US will be crucial for immediate directions. As per the forecasts, the S&P Global PMIs for Germany and the Eurozone are likely to improve while the US numbers may ease during the stated month and hence the pair buyers may witness additional support from the scheduled activity numbers.
Technical analysis
EUR/USD is well-set to visit the 1.1000 round figure unless declining below the 1.0765 level comprising the last weekly low.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
