The euro/dollar exchange rate declined for the fourth consecutive day on Thursday, following encouraging employment and economic data. As producer prices in the eurozone decreased in December, this data provided reassurance to traders that the European Central Bank’s cycle of easing is concluded. At the moment, the pair is valued at 1.1652, down by 0.19%.
Strong US labor data overshadows weaker eurozone indicators, contributing to euro’s decline.
Investors are currently fixated on the dollar as they await the U.S. non-farm payrolls report, bolstered by robust job market figures. Wednesday’s ADP numbers were solid, and December’s Challenge Job Cuts report revealed fewer layoffs compared to November.
This data comes on the heels of U.S. jobless claims, indicating that fewer individuals than anticipated applied for unemployment benefits.
Consequently, the Dollar Index (DXY), which measures the dollar against a basket of currencies, rose by 0.19% to 98.91, surpassing the crucial technical threshold of the 200-day simple moving average (SMA) at 98.87. If the index closes above this level, it might climb above the 99.00 mark.
Comments from Fed Director Stephen Milan indicating a dovish stance were mostly overlooked as market players priced in two anticipated rate cuts, as suggested by Prime Market Terminal data. Meanwhile, U.S. Treasury Secretary Scott Bessent urged Federal Reserve officials to act quickly on rate cuts to invigorate economic growth.
Over in Europe, reports highlighted continuing declines in inflation alongside rising consumer confidence. Still, economic sentiment indicators for December showed deterioration among service providers, retailers, and consumers.
Looking ahead, the Eurozone Economic Statistics will include retail sales data, comments from ECB’s Philipp Lane, and information on German industrial production. In the U.S., key announcements will consist of nonfarm payrolls, unemployment rates, consumer sentiment from the University of Michigan, and housing data.
This week’s euro price
The following table presents the percentage changes of the Euro (EUR) against major currencies this week, revealing the euro’s strength against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | Australian Dollar | New Zealand Dollar | Swiss Franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.56% | 0.17% | 0.02% | 0.86% | -0.34% | 0.15% | 0.81% | |
| EUR | -0.56% | -0.39% | -0.48% | 0.29% | -0.90% | -0.41% | 0.26% | |
| GBP | -0.17% | 0.39% | -0.19% | 0.70% | -0.51% | -0.02% | 0.66% | |
| JPY | -0.02% | 0.48% | 0.19% | 0.81% | -0.38% | 0.11% | 0.83% | |
| CAD | -0.86% | -0.29% | -0.70% | -0.81% | -1.03% | -0.70% | -0.03% | |
| Australian Dollar | 0.34% | 0.90% | 0.51% | 0.38% | 1.03% | 0.49% | 1.17% | |
| New Zealand Dollar | -0.15% | 0.41% | 0.02% | -0.11% | 0.70% | -0.49% | 0.68% | |
| Swiss Franc | -0.81% | -0.26% | -0.66% | -0.83% | 0.03% | -1.17% | -0.68% |
This chart indicates the percentage fluctuations between major currencies, with the base currency selected from the left and the quote currency from the top row. For instance, selecting EUR from the left and moving to USD shows the percentage change in that box.
Daily digest that influences the markets: Euro weighed down by US job data
- The U.S. Department of Labor noted 208,000 new unemployment claims for the week ending January 3, slightly below the anticipated 210,000, but up from 200,000 the prior week.
- Challenger Gray & Christmas reported a significant drop in layoffs, with 35,553 layoffs announced in December compared to 71,321 in November, indicating gradual labor market improvement.
- The U.S. trade balance showed a marked improvement in October, with the deficit reducing from $48.1 billion to $29.4 billion, contrary to expectations of an increase to $58.9 billion, attributed mainly to decreased imports, especially in pharmaceuticals.
- The New York Fed’s Survey of Consumer Expectations depicted a mixed outlook, with short-term inflation expectations increasing while medium to long-term expectations stayed steady.
- One-year inflation expectations rose from 3.2% in December to 3.4%, but three- and five-year projections held constant at 3.0%, suggesting short-term inflation worries but overall stability.
- In the eurozone, producer prices increased by 0.5% from 0.1% in October, surpassing the 0.2% expected rise. However, they contracted by 1.7% year-over-year, a slower pace than the expected 1.9% decline.
- Additional information indicated improvements in consumer confidence and business conditions in December, with German factory orders rising 5.6% month-on-month in November, outperforming expectations by 1% and up from 1.6% in October.
Technical outlook: EUR/USD continues to struggle as traders eye the 200-day SMA
The technical outlook for EUR/USD has grown weaker, with indications it may close below Wednesday’s low of 1.1672. Although the Relative Strength Index (RSI) suggests a neutral to downward trend, sellers might drive the pair below the substantial support at the 200-day SMA at 1.1561.
The first support level is at the 50-day SMA at 1.1640, followed by the 200-day SMA around 1.1561. For a bullish shift, buyers would need to push past 1.1700 and the 20-day SMA of 1.1733.
