EUR/USD holds below the mid-1.0900s ahead of US PMI, FOMC Minutes

The EUR/USD pair remains under pressure during the early Asian session on Wednesday. The downtick of the pair is driven by the stronger US Dollar (USD) broadly. The major pair currently trades around 1.0941, down 0.02% on the day. 

On Tuesday, the US S&P Global Manufacturing PMI for December eased to 47.9 from the previous reading of 48.2, weaker than the expectation of 48.2. The figure suggested a slowdown in the manufacturing sector. 

The Federal Reserve (Fed) delivered the dovish message at its last meeting of 2023 with the anticipation that the Fed will start easing the cycle with a quarter-point cut in March, followed by similar cuts in May and June. However, market participants will await the highly anticipated US labor data this week for more hints.  

Across the pond, an increased possibility of rate cuts from the European Central Bank (ECB) to boost the economy, while the Fed may hold the rate a little longer, exert some selling pressure on the Euro (EUR), and act as a headwind for EUR/USD. Investors have priced in six rate cuts for 2024 from the ECB. 

On Tuesday, ECB policymaker Pablo Hernandez de Cos said that economic data uncertainty remained high and that the timing of the ECB policy pivot would be determined by data. He also estimated that inflation in the Eurozone will continue to decline.

Traders will keep an eye on the German Unemployment Rate, the December US ISM Manufacturing PMI, November JOLTS Job Openings, and the Federal Open Market Committee (FOMC) Minutes, due on Wednesday. The attention will shift to the US labor data on Friday, including US Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings, due later on Friday.