EUR/USD fluctuates as investors await fresh direction from US data

As of this writing, the EUR/USD is fluctuating at 1.0954, ahead of the US Employment and ISM Services PMI data. An important drop in US job openings suggests that the US labour market is currently cooling. The recent increase in the price of oil may cause inflation in the Eurozone, thus the ECB would keep raising rates. Following an upward movement above 1.0970 in the early Asian session, the EUR/USD pair is currently moving sideways.

The Euro’s major pair is expected to continue its lackluster move as investors are awaiting the release of the United States Automatic Data Processing (ADP) Employment and ISM Services PMI data.

S&P500 concluded Tuesday’s gains with decent losses as investors grew more cautious ahead of US economic reports, portraying a drop in the risk appetite of the market participants. The US Dollar Index (DXY) has refreshed its monthly low near 101.46 as investors are anticipating the maintenance of status-quo by the Federal Reserve (Fed) for its May monetary policy meeting.

The likelihood of maintaining the current interest rate is close to 60%. To prevent the US economy from entering a recession, the Fed must turn its attention to shrinking manufacturing operations. Further information will be available after the US economic numbers were released on Wednesday.

The consensus claims that the US economy added 200K more jobs in March than it did in February, when it added 242K. If the US labour market remains tight, expectations for one more rate hike from the Fed may rise. Yet, Tuesday’s lacklustre Job Openings data announcement suggests that the labour market is currently cooling.

Data made public on Tuesday shows fewer requests for talent acquisition at 9.9 million, down from 10.5 million in January and the 10.4 million that market players had anticipated.

Investors will also be kept occupied by US ISM Services PMI in addition to US Employment data. The US ISM Services PMI (Mar), which had previously been released at 55.1, is predicted to decline to 54.5. In addition, the New Orders Index, which measures forward demand, would fall from 62.6 in the previous edition to 57.6.

Policymakers at the European Central Bank (ECB) would be ecstatic to see that consumer inflation forecasts for the next 12 months dropped from 4.9% in January to 4.6% in February. Yet, it appears that the data has not yet taken into account the most recent increase in the price of oil, which might have soured the atmosphere. Thus, ECB President Christine Lagarde would keep raising rates in the future.