EUR/USD falls below 1.0500 after US ISM Services figures.

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  • The euro falls against the dollar after hitting a six-month high near 1.0600.
  • US ISM non-manufacturing activity surprised to the upside in the country.
  • Eurozone data was mixed, though skewed to the negative as Retail Sales fell.
  • EUR/USD Price Analysis: Trending higher, but could pull back to 1.0400 before testing 1.0600.

The euro (EUR) is almost unchanged against the US dollar (USD) after the release of an upbeat US services PMI that supported the USD, while the strong US jobs report for November last week shows that the labor market remains tight. At the time of writing this report, the pair EUR/USD is trading at 1.0494, down 0.40%.

The ISM for US services was better than expected, which weighed on the euro

Sentiment remains deteriorating, despite China beginning to ease Covid-19 measures. The ISM US Non-Manufacturing Services Index for November rose to 56.5, above estimates of 53.3, down from 54.4 in October. According to Bloomberg, “the services sector expanded at a faster pace in November as the holiday season bolstered business activity”, noting that the price index sub-component confirmed that inflationary pressure is biased upwards. .

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Following the release of economic data, the EUR/USD pair fell from around 1.0550 to 1.0503.

At the same time, US factory orders rose 1% in November, against expectations for a 0.7% increase, and also smashed September’s 0.3% data. “October new orders for manufactured durable goods, which have been seven of the past eight months, increased by $3 billion, or 1.1%, to $277.4 billion, up from a previously posted 1% increase,” further read in the post.

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Aside from this, last week’s jobs report, November Non-Farm Payrolls (NFP) rose by 263,000, beating estimates of 200,000, while the unemployment rate, at 3.7%, was unchanged. Average Hourly Earnings rose 5.1%, versus 4.9% forecast, which would cause the US Federal Reserve (Fed) to continue raising rates, albeit by 50 basis points, as the president said last Wednesday of the Fed, Jerome Powell.

Meanwhile, on the other hand, the S&P Global Services PMIs and Eurozone Composite indices were unchanged, while Eurozone Retail Sales came in worse than expected at -1.8%m/m vs -1.7. % expected and -2.7% YoY, below the -2.6% estimate. In addition, several European Central Bank (ECB) officials, Villeroy and Makhlouf, backed a 50 basis point rate hike at the December meeting.

EUR/USD Price Analysis: Technical Perspective

Technically, the daily chart for EUR/USD has a neutral bias to the upside after breaking above the 200 day EMA at 1.0388. As EUR/USD rallied to a six-month high at 1.0594, posting a successive series of highs, oscillators such as the Relative Strength Index (RSI) and Rate of Change (RoC) did not, resulting in divergence. negative between price action/oscillators.

Therefore, the first support for EUR/USD would be the 1.0500 figure, followed by the December 2 daily low at 1.0428 and the psychological level of 1.0400.

Source: Fx Street

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