Euro dips on US PMI, hawkish Fed comments

It has been a volatile day for the euro. The euro and other majors have been whipsawing. EUR/USD started the day with strong gains, but has sharply reversed directions in the North American session and is in negative territory.

Key US data sends dollar on roller-coaster

The US dollar was down earlier in the day, as a very disappointing ADP Employment Report send the greenback broadly lower. The ADP read of 330 thousand was well shy of the market consensus of 690 thousand. The dollar has since rebounded, after US ISM Services outperformed and some hawkish comments from Fed Vice Chair Richard Clarida.

The ADP report is not considered a reliable precursor for the official NFP report, which will be released on Friday. Still,  the massive miss could raise concerns about NFP also falling flat and missing the consensus of 870 thousand. The ADP release sent the dollar broadly lower, but the greenback rebounded sharply after the ISM Services PMI jumped to 64.1, crushing the forecast of 60.5 and ahead of the previous reading of 60.1.

The dollar received a further boost from some hawkish comments from Fed members. Fed Vice Chair Richard Clarida stated that the Fed would likely reach its economic targets by the end of 2022 and he expected rate hikes to follow in 2023. Clarida noted that the labor market still needs to recover, but inflation should rise above the Fed’s target of 2%. Fed member James Bullard added to the hawkishness, stating that inflation had been more robust than expected and that the Fed could wrap up tapering by the end of first quarter of 2022.

.

EUR/USD Technical

• EUR/USD is faces resistance at 1.1933. Above, there is resistance at 1.1993
• On the downside, there are support lines at 1.1788 and 1.1703

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.