EUR/USD Recommendations January 5, 2023: Consolidating Gains After US Data

On January 5, 2023, the EUR/USD was in a period of consolidation as it continued to build on recent gains following the release of US data. In this article, we will look at our recommendations for investing in the EUR/USD pair and offer insights into why these decisions might make sense for you.

eur/usd

Monitor news that may affect the currency pair's exchange rate.

As with any currency pair, it is important to keep abreast of news that may significantly affect the currency exchange rate. With the EUR/USD pair, global events such as political developments, economic data releases and central bank rhetoric can all impact its value. Investors should also be mindful of local US news, such as speeches by Fed officials and reports on consumer prices, as these can have a large bearing on the performance of this currency pair.

EUR/USD briefly dropped towards 1.0600 after hitting a daily high of 1.0635. The US dollar sell-off appears to be pausing as investors await the manufacturing PMI report from ISM.

The US manufacturing PMI report from ISM came in slightly less than expected and less than the previous month, allowing the EUR/USD currency pair to manage to regain ground and trade around 1.0615.

The ISM's manufacturing PMI came in at 48.4% in December compared to the consensus forecast of 48.5% and November's figure of 49%. The manufacturing PMI figure at 48.4 is the lowest reading since May 2020 at 43.5.

The sharp decline in government bond yields during the Asian session trading hours, pressured the US dollar down. Meanwhile the Australian dollar soared higher on news that China may partially lift its ban on coal imports from Australia. Meanwhile, the Japanese Yen rose on news that the Bank of Japan is trying to lower government bond yields.

S&P Global publishes the final forecast of the December PMI. Germany's services PMI was reported up to 49, while that from the Eurozone was confirmed at 49.8, indicating that the European Union has left the worst behind. These reports indicated that price pressures remained high but subsequently fell from their peaks. This news provides some support to the EUR.

Support & Resistance

The closest "support" is waiting at 1.0510 which, if it is successfully passed, will continue to 1.0470 and then 1.0450. The nearest "resistance" is waiting at 1.0650 which, if it is successfully passed, will continue to 1.0695 and then 1.0740.