EUR/USD faces downward pressure as the Dollar regains ground following positive jobless claims data, with traders looking to Friday's NFP print to determine the next move for Fed policy.
The pair has retreated from just under 1.1300, its highest since early October, to just above 1.1200, giving back about a third of the rise from the October 29 low above 1.1100. Momentum has turned down from overbought and the pair sits below the 50-day EMA near 1.1300. Friday's NFP (forecast 65K after 29K) and Tuesday's CPI are the next swing factors.
The Dollar recovered part of Wednesday's drop, helped by jobless claims at 189K, 7K under forecast, while markets trimmed the odds of a December Fed hike to near 70% from above 80%.
Friday's October Nonfarm Payrolls at 13:30 GMT with a 65K forecast, Tuesday's October CPI with a 0.3% forecast, and the ECB's December meeting, which Lagarde said will be decided by data released between now and then.
Eurozone producer prices rose 11.1% year-on-year in September and inflation hit 4% in October, a three-year high, with Lagarde, Nagel and Panetta all pointing to a possible December hike from the 2.5% deposit rate. That is bullish in principle, yet the Euro has fallen anyway, showing the hawkish case is already priced and near-term momentum is down.
Lagarde said data between now and December will decide a hike, and Bundesbank President Nagel and Bank of Italy Governor Panetta have both said a December hike may be needed, lifting the deposit rate from 2.5%.
The Dollar hit a one-month low Wednesday after Democrats took the House and Senate, then recovered as jobless claims came in at 189K, 7K under forecast. However, unit labour costs fell 0.7% against a forecast rise of 0.6%, cutting December Fed hike odds to near 70% from above 80%. Mixed signals leave the direction hostage to Friday's NFP.
After Thursday's figures, markets price a December Fed hike near 70%, down from above 80% on Wednesday.
The Euro has retreated from one-month highs near 1.1300 to trade just above 1.1200 as the US Dollar recovers from recent losses. Investors are now focused on Friday's US Nonfarm Payrolls report, which is expected to show 65K jobs added, as markets recalibrate expectations for a December Federal Reserve rate hike.
The Euro retreated as the US Dollar recovered from Wednesday's lows, bolstered by better-than-expected jobless claims data and a shift in market sentiment regarding Fed policy.
Key catalysts include Friday's US Nonfarm Payrolls (NFP) report, upcoming Eurozone retail sales and GDP data, and the October CPI release on November 10.