EUR/USD pierces the 1.1300 figure after US ISM Services PMI By christianborjon EURUSD Majors Macroeconomics
The Institute for Supply Management reported that the Services PMI in the US fell from 69.1 in November to 62.0 in December. Despite contracting, a reading above 50 indicates growth in the services sector. The contraction is likely attributed to the resurgence of Covid-19 cases, but supply constraints appear to be easing.
Before Wall Street opened, the Department of Labor reported that Initial Jobless Claims for the week ending on January 1, 2022, increased by 207K higher than the 197K foreseen by economists. The 4-week average topped 204.5K, more than the 199.75K in the prior week. In spite of rising, jobless claims hovered near a five-decade low in recent weeks.
On Wednesday, the Federal Reserve released its December minutes. The US central bank noted that monetary policy accommodation was unnecessary and that a faster reduction of its bond-purchasing program was needed before hiking rates. Moreover, Fed members began discussions of a contraction of its balance sheet, which was perceived by a hawkish signal by the markets, with investors selling stocks aggressively.
In the meantime, the US Dollar Index, which measures the greenback’s performance against six rivals, is up 0.02%, sitting at 96.20, underpinned by rising US 10-year Treasury yields rising three and a half basis points, currently at 1.7369%.The EUR/USD daily chart depicts the pair as downward biased. The daily moving averages reside well above the spot price.
On the downside, the EUR/USD first support level would be the January 4 low at 1.1273. A breach of the latter would open the door for crucial support levels, with December 15, 2021, a daily low at 1.1222, followed by a 2021 yearly low at 1.1186.
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