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EUR/USD drops for the fourth straight day on Thursday as jobs economic data fared better than expected. Data in the Eurozone reaffirmed traders that the European Central Bank easing cycle finished, as producer prices in the bloc deflated in December. At the time of writing, the pair trades at 1.1652. down 0.19%.

The Euro weakens as upbeat US labor indicators overshadow softer Eurozone data

Market participants are turning to the Dollar ahead of the US Nonfarm Payrolls report, in part due to strong jobs market data. On Wednesday, ADP figures were solid while the Challenge Job Cuts report for December showed that companies fired less people than in November.

The data was followed by US jobless claims, which showed that fewer than expected Americans applied for unemployment benefits.

Consequently, the US Dollar Index (DXY), which tracks the buck’s performance against a basket of currencies, has risen 0.19% up at 98.91, surpassing the key technical 200-day Simple Moving Average (SMA) level, which lies at 98.87. A daily close above the latter could propel the DXY, above the 99.00 mark.

Dovish comments of Fed Governor Stephen Miran were mostly ignored by market participants, which had priced in two rate cuts, according to Prime Market Terminal data. in the meantime, the US Treasury Secretary Scott Bessent pressured Federal Reserve officials, saying that they should not delay interest rate cuts, to propel economic growth.

In Europe, the docket was packed, with inflation continuing to ease and Consumer Confidence improving. However, the Economic Sentiment Indicator deteriorated in December, due to service providers, retailers and consumers.

Ahead the Eurozone economic docket will feature Retail Sales for the bloc, comments from ECB’s Philip Lane, and German Industrial Production data. in the US, the calendar will feature Nonfarm Payrolls, the release of the Unemployment Rate, the University of Michigan Consumer Sentiment and housing data.

Daily digest market movers: Euro weighed by US jobs data

• US Initial Jobless Claims for the week ending January 3 came in at 208K, below forecasts of 210K, though slightly higher than the prior week’s 200K, according to the U.S. Department of Labor.
• The data reinforces signs of a gradually improving labor market, following the December Challenger Job Cuts report from Challenger, Gray & Christmas, which showed employers announced 35,553 layoffs, nearly half of November’s 71,321.
• The US Goods and Services Trade Balance showed a sharp improvement in October, with the deficit narrowing to $29.4 billion from $48.1 billion, defying expectations for a widening to $58.9 billion. The surprise improvement was driven by a steep decline in imports, particularly in pharmaceuticals.
• The Federal Reserve Bank of New York Survey of Consumer Expectations (SCE) indicated a mixed outlook among households. Short-term inflation expectations ticked higher, while medium- and long-term expectations remained unchanged.  
• One-year inflation expectations rose to 3.4% in December from 3.2%, while expectations over three- and five-year horizons held steady at 3.0%, signaling persistent but contained inflation concerns beyond the near term.
• In the Eurozone, the Producer Prices Index (PPI) accelerated to 0.5% from 0.1% in October, beyond market expectations of a 0.2% increase. Year-on-year, producer prices contracted at a 1.7% pace from -0.5% in October, but still at a slower pace than -1.9% forecasted by market analysts.
• Other data showed that the Consumer Confidence and the Business Climate in December improved. German Factory Orders for November, exceeding estimates of 1%, rose by 5.6% MoM, from 1.6% in October.

Technical outlook: EUR/USD prolongs its agony as traders eye the 200-day SMA

EUR/USD technical outlook weakened further and it seems poised to end the session below Wednesday’s low of 1.1672. The Relative Strength Index (RSI) shows that the trend is neutral to downward, but sellers need to push the pair below the key support seen at the 200-day SMA at 1.1561.

On the downside, initial support is found at the  50-day SMA at 1.1640, followed by the 200-day SMA around 1.1561. To revive the bullish case, buyers would need to reclaim 1.1700, followed by the 20-day SMA at 1.1733.

(Click on image to enlarge)

EUR/USD daily chart

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