- DXY extends recovery into Asia.
- Holds above the 1.2000 support.
- Awaits Euro area final services PMIs and US data.
The EUR/USD pair consolidated its post-FOMC minutes-led slide just ahead of 1.20 handle almost through the Asian session, with the risks tilted to the downside ahead of the Euro zone and US macro releases.
EUR/USD: Monetary policy divergence back in play?
The spot continues to find buyers at 1.2000 levels, despite higher Treasury yields that boost the demand for the US dollar versus its main competitors. However, the bounce appears limited, as the monetary policy divergence between both continents is back in play, especially after yesterday’s Dec FOMC meeting minutes was read more hawkish than anticipated while markets await the ECB minutes due next week for fresh insights on the policy outlook this year.
Meanwhile, markets believe that the major could extend the downward correction below a break of the 1.2000 mark, as the year-end rebalancing of positions in the US dollar could be over. Hence, the pair could continue to overlook the macro news, just as yesterday’s upbeat German labour market report had little impact on the EUR. The German employment data showed that the country’s unemployment rate dropped to a record low while the unemployment change for Dec came in at -29k vs. -13k expected and -20k previous.
Valeria Bednarik, Chief Analyst at FXStreet, wrote, “attention now shifts toward US employment data as the country will release its usually weekly unemployment claims this Thursday, alongside with the ADP private employment survey, ahead of Friday's Nonfarm Payroll report. Also, the final Markit services and composite PMIs for the EU and the US will be out this Thursday.”
EUR/USD Technical Levels
The Research Analysts at Scotiabank, explain: “The EUR has slipped back from September's peak levels and perhaps risks consolidating a little more in the near term; the market range so far today is inside yesterday's which supports the notion of consolidation. While spot perhaps risks dipping a little more than we expected Tuesday, we think the "internals" of the EUR rally remain strong from a technical point of view. However, that may mean support nearer 1.1940/50 near-term than the 1.20 area we suggested yesterday. Resistance remains 1.2090/1.21.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.