- EUR/USD erased its previous gains, despite posting a 9-month high around 1.0887.
- The reduction of 28,000 jobs at big technology companies and weak US economic data sparked fears of a recession.
- Fed officials support interest rate hikes to 5% or slightly above.
The pair EUR/USD reversed course after hitting a nine-month high around 1.0887 on Wednesday, after US economic data could further cement the idea that US Federal Reserve (Fed) officials slow down the rate of hardening. Also, the US dollar (USD) found a bid and erased all of its losses at the time of writing. The EUR/USD pair is trading at 1.0793, still above its opening price.
Job cuts at big US tech companies and poor economic data from the country weighed on the euro
Wall Street backed down on learning that Microsoft and Amazon will cut 28,000 jobs. Therefore, investor sentiment waned as US economic data showed signs of deterioration in the US economy. Data releases showed inflation continued to moderate, with December US Producer Price Index (PPI) falling to 6.2% yoy, below estimates of 6.8%, while core PPI rose 5.5%. YoY, below forecasts of 5.7%.
Meanwhile, US Retail Sales fell 1.1%m/m in December, below November’s downwardly revised numbers, which contracted 1%. However, the annual basis remained unchanged at 6%. Later, Industrial Production declined 0.7% mom and 1.7% in the fourth quarter, the Federal Reserve reported.
Later, two Fed officials, namely Bullard, President of the St Louise Fed, and Loretta Mester, President of the Cleveland Fed, stated that the Federal Funds Rate (FFR) should be around 5 %, As minimum. Bullard commented that the central bank has to get there “as fast as we can”, while Mester added that rates have to be above 5%, according to her forecasts.
What must be considered?
Thursday’s economic calendar in the Eurozone will include the EU Current Account, the ECB Monetary Policy meeting accounts and Lagarde’s ECB speech. In the United States, housing data, the Philadelphia Fed index, initial jobless claims and the Fed speech will be published.
Key EUR/USD Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
