Events to pay attention to today:
15:15 EET. USD – ADP Non-Farm Employment Change
21:00 EET. USD – FOMC Meeting Minutes
EURUSD:
On Tuesday, the EUR/USD exchange rate declined against the US dollar, falling by four-tenths of a percentage point after a failed recovery to 1.0400. The pair is currently trading below last week’s 26-month low, but the difference is minimal. Market analysts are optimistic about a reversal, as the Federal Reserve continues to recover towards 1.0200.
The European Harmonised Index of Consumer Prices (HICP) was published in line with expectations, with the annual HICP for the year ending December rising slightly to 2.4% y/y from the previous reading of 2.2%.However, much of the upward pressure in European inflation figures appears to be either embedded in older figures or related to non-structural items, giving Euro traders some hope that things will continue to improve.
In contrast, the US ISM Services Purchasing Managers’ Index (PMI) business activity survey and the ISM Services price data for December were both weaker than expected, raising concerns among market participants that the Federal Reserve (Fed) may not be able to deliver as many rate cuts in 2025 as investors had originally anticipated.
In the US, the agenda for the upcoming trading session includes the release of December ADP employment change data and the minutes of the Federal Reserve’s latest meeting. While ADP employment data is not considered a reliable predictor of Friday’s Non-Farm Payrolls (NFP) data, traders are not overreacting to significant deviations from forecasts.Investors will be looking for any indications that could potentially lead to a rate cut before June, which includes a notable softening of the labour market.
Trading recommendation: Trading mainly by Sell orders from the current price level.
Origin: FreshForex