BUZZ-COMMENT-EUR/USD bulls need economic convergence

Jan 7 (Reuters) - EUR/USD turned lower Tuesday, falling away from key resistance in the 1.0445/65 zone despite stronger inflation in the euro zone as U.S. economic data continues to hold sway.

December euro zone data indicated that inflation accelerated for the third consecutive month, which could lead to a less dovish ECB, though markets remain positioned for more easing.

U.S. economic exceptionalism persists, however, which could lead the Fed to pause its cutting cycle or halt it entirely.

Above estimate November JOLTS showed a large rise to 8.098m job openings from October's upward revised 7.839m openings.

December ISM non-manufacturing PMI was above estimates, increasing to 54.1 from 52.1 in November. ISM prices-paid jumped up to 64.4 from the prior 58.2 which may indicate U.S. inflation is rising again.

Rates markets increased the dollar's yield advantage over the euro. Fed SRAM26 and ECB FEIZ5 terminal rate spreads widened to over 200bps while German-U.S. 2-year yield spreads US2DE2=RR neared -212bps.

Investors will now focus on December ADP, weekly jobless claims and December U.S. payroll reports.

Downbeat results will be needed if EUR/USD bulls want their views validated.

Employment reports indicating a solid jobs market could lower the probability the Fed cuts further, potentially rallying the dollar.

If so, EUR/USD might erase the early 2025 rally and make a move toward parity.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))