- EUR/USD erases its earlier gains, despite registering a 9-month high around 1.0887.
- Big Tech companies slashing 28K jobs, and weaker US economic data, sparked recession fears.
- Fed officials support interest rate hikes until 5% or slightly above.
EUR/USD reversed its course after hitting a nine-month high around 1.0887 on Wednesday after US economic data could further cement the case for US Federal Reserve (Fed) officials to slow down the pace of tightening. Additionally, the US Dollar (USD) found a bid and erased all of its losses at the time of writing. The EUR/USD exchanges hands at 1.0793, still above its opening price.
US big tech companies cutting jobs, and soft US economic data, weighed on the EUR
Wall Street edged lower as crossing newswires announced that Microsoft and Amazon are set to slash 28K jobs. Therefore, investors’ moods dampened, as earlier US economic data showed signs of deterioration in the US economy. Data released showed that inflation continued to ease, with December’s US Producer Price Index (PPI) sliding to 6.2% YoY, below estimates of 6.8%, while the core PPI advances by 5.5% YoY, beneath 5.7% forecasts.
In the meantime, US Retail Sales plunged 1.1% MoM in December, below the downward revised November’s figures, which shrank by 1%. However, annually based were unchanged at 6%. Later, Industrial Production decreased by 0.7% MoM and 1.7% in Q4, as reported by the Federal Reserve.
Later, two Fed officials, namely St. Louis Fed President Bullard and Cleveland’s President Loretta Mester, said that the Federal Funds rate (FFR) needs to be at around 5%, at the minimum. Bullard commented that the central bank needs to get “as quickly as we can,” while Mester added that rates need to be above 5%, per her forecasts.
What to watch?
Thursday’s economic calendar in the Eurozone would feature the EU’s Current Account, ECB’s Monetary Policy Meeting Accounts, and ECB’s Lagarde speech. Across the pond, the US docker will reveal housing data, the Philadelphia Fed Index, Initial Jobless Claims, and Fed speak.
EUR/USD Key Technical Levels