US dollar has been hit hard by FOMC earlier this week. New dot-plot suggesting three 25 basis point rate cuts in 2024 sparked a rally on US equity markets and caused USD to lose ground, and EURUSD to gain. The upward move on EURUSD was extended yesterday on the back of a rather hawkish ECB meeting. As a result, the main currency pair jumped around 2% over two days - from below 1.08 on Wednesday to above 1.10 yesterday. However, a quick reversal occurred today with EURUSD now testing the 1.09 mark. What is driving the move lower today?
- Flash PMIs for December from European countries disappointed
- German services PMI dropped to 48.4 (exp. 49.6) while manufacturing PMI climbed to 43.1 (43.4)
- French services PMI dropped to 44.3 (exp. 46.0) while manufacturing PMI dropped to 42.0 (exp. 43.2)
- On the other hand, US services PMI climbed from 50.8 to 51.3 (exp. 50.5)
EURUSD is approaching a support zone in the 1.09 area. Interestingly, TNOTE remains at elevated levels and does not justify today's USD strengthening.
Source: xStation5
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