Ahead of FOMC minutes, EUR/USD advances on mixed US data

The Euro is retracing against the US dollar after hitting daily highs of 1.0635 and is dropping after the release of mixed US economic data, slightly boosted the US Dollar and shifting sentiment sour. At the time of writing, the EUR/USD is trading at 1.0610, above its opening price by 0.66%.

The EUR/USD fell below 1.0600 after the release of US economic data. November’s JOLTs report showed that the labor market remains tight, coming at 10.458M vs. 10.0M estimates, while October’s upward revision to 10.512M vs. 10.334M cemented the Federal Reserve’s (Fed) case for a 50 bps rate hike on February 1.

At the same time, the Institute for Supply Management (ISM) revealed the Manufacturing PMI index for December, which fell to 48.4, more than the 48.5 estimated by street analysts. Timothy R. Fiore, Chair of the ISM, noted, “The US manufacturing sector again contracted, with the Manufacturing PMI® at its lowest level since the coronavirus pandemic recovery began.

With Business Survey Committee panelists reporting softening new order rates over the previous seven months, the December composite index reading reflects companies’ slowing their output.”

Delving into the sub-components of the report, the Employment Index rose by 51.4, returning into expansion, showing an improvement in the labor market, though pressuring the Fed for further action.

The Production and Prices indices continued to ease, flashing the consumer’s shift toward services rather than goods.

Meanwhile, the US Dollar Index (DXY), a gauge of the buck’s value against a basket of six currencies, falls 0.41%, down to 104.258.

From a daily chart perspective, the EUR/USD remains neutral biased, seesawing around the 20-day Exponential Moving Average (EMA) at around 1.0583. Since today’s price action has failed to crack Tuesday’s high of 1.0683, the EUR/USD pair remains exposed to selling pressure.