• EUR/USD extends losses as ISM Services PMI and improving US hiring reinforce Dollar demand.
• Eurozone inflation hits the ECB’s 2% target, reducing urgency for policy shifts and weighing on the Euro.
• Traders await Eurozone sentiment data and US Job Cuts, Jobless Claims for fresh directional signals.

EUR/USD extends its losses for the third straight day in the week, down some 0.10% as the Greenback appreciates on strong Purchasing Managers Index (PMI) report by the ISM, along with a solid jobs report. Meanwhile, inflation decelerated in the Eurozone, remaining near the European Central Bank’s target and weighed on the shared currency. The pair trades at 1.1677, poised to close on a daily basis below 1.1700.

Euro weakens below 1.1700 as upbeat US PMIs and firm jobs data overshadow soft Eurozone figures

The Dollar was favored after the ISM Services PMI print for December, crushed estimates and indicated that business activity in the services sector rose. Job openings declined according to the Department of Labor, but an earlier report showed that hiring at US companies grew modestly in December and improved from November’s report.

In Europe, the Harmonized Index of Consumer Prices (HICP) in the bloc hit the ECB’s 2% goal on an annual basis, while underlying HCIP remained slightly high. This and disappointing German Retail Sales in November, pressured the Euro, who fell to new two-day lows of 1.1672.

On the US data, the US Dollar appreciated as revealed by the US Dollar Index (DXY). The DXY, which measures the buck’s performance against six currencies, edged up 0.14% at 98.73, a headwind for the EUR/USD.

Meanwhile, traders focus shifts on further data releases. In Europe, traders will eye the Eurozone Consumer Confidence, Business Climate, Economic Sentiment and the Producer Price Index. Across the pond, the US schedule will feature the December’s Challenger Job Cuts and Initial Jobless Claims for the week ending January 3.

Daily digest market movers: Stellar US services PMI, drives Euro lower

• The Institute for Supply Management reported that the ISM Services PMI surged in December, signaling strengthening activity across the services sector. The index jumped from 52.6 to 54.4, beating expectations of 52.3. Within the report, the Employment subcomponent returned to expansion, rising from 48.9 to 52.0, a sign of relief for Federal Reserve officials. Meanwhile Prices Paid eased modestly from 65.4 to 64.3, hinting at some moderation in cost pressures despite solid demand.
• At the same time, the US Department of Labor released the November JOLTS report, showing job openings declined to 7.146 million from 7.449 million in October, pointing to a gradual cooling in labor demand.
• Earlier, the ADP Employment Change report showed private payrolls increased by 41,000 in December, below forecasts of 47,000, but a notable improvement from November’s 29,000 job losses, suggesting tentative stabilization in hiring toward year-end.
• In Europe, the EU HICP rose by 2% YoY in December, as expected, slower than 2.1% in November. On a monthly basis, inflationary pressures grew by 0.2% after deflating 0.3% in the previous month.

Technical outlook: EUR/USD dives below 1.1700 as RSI turns bearish

The EUR/USD technical picture continued to deteriorate ending Wednesday’s session below the 1.1700 figure. Bears had taken over bulls as depicted by the Relative Strength Index (RSI) which crossed below the 50-neutral line, an indication that sellers are in charge.

On the downside, the first key support is the 100-day Simple Moving Average (SMA) at 1.1663, followed by the 50- and the 200-day SMAs, each at 1.1640 and 1.1561, respectively.

For a bullish resumption, bulls must clear the 20-day Simple Moving Average (SMA) at 1.1733, ahead of 1.1750, which would clear the path towards 1.1800.