EUR/USD marginally lower following mixed German data

The EUR/USD pair is trading at 1.0817, down 0.05% from the previous day’s gains against the dollar. The Eurozone’s largest economy contracted by 0.3% in Q4 2023, while business sentiment improved.

The US economic calendar is absent, but recent unemployment claims figures and S&P Global Flash PMIs justify Fed officials’ hawkish commentary. Policymakers are ready to ease policy but not in a rush, as recent economic data solidifies the economy’s strength, potentially reinforcing inflationary pressures.

The CME FedWatch Tool shows traders aligning with the latest Fed projections, with officials estimating three rate cuts. As of writing, traders have priced in 81 basis points of easing toward the end of 2024. The EUR/USD pair is neutral to bearish bias, with bears remaining in charge. If prices push below the 1.0800 figure, they could exacerbate another leg down, targeting the November 10 low of 1.0656. To regain the 1.0750 area and the 1.0700 mark, the pair must reclaim the 200-DMA before buyers lift the exchange rate towards the 50-DMA ahead of 1.0900.