EUR/USD languishes near lows with US Dollar buoyed by economic data

• EUR/USD hovers right above 1.1600 after hitting six-week lows at 1.1593.
• Strong US employment and manufacturing figures boosted the US Dollar.
• Fed officials Bostic and Schmid warned against cutting interest rates further on Thursday.

EUR/USD is trading right above 1.1600 at the time of writing on Friday, practically flat on the daily chart and on track to complete a three-week lowing streak. The pair depreciated 0.34% the previous day, as strong US employment and manufacturing reports cemented the view that the Federal Reserve (Fed) will keep interest rates unchanged in the coming months.

Economic data released by the US Department of Labor on Thursday revealed that Initial Jobless Claims decreased against expectations to their lowest levels since November, easing some of the market's concerns about the labor market deterioration.

At the same time, releases of the New York Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Survey showed readings well beyond expectations, highlighting a strong start to the year for the sector.

Eurozone figures released this Friday confirmed that German consumer Inflation eased to the European Central Bank's target of 2% YoY in December. In the US, the focus will be on December's Industrial Production data and the speeches from the Fed's Vice Chairs Michelle Bowman and Philip Jefferson.

Daily Digest Market Movers: US Dollar remains supported by strong data

• The US Dollar Index (DXY) is trimming gains on Friday but maintains its broader bullish trend intact. Recent US economic reflects a stronger economy, with stubbornly high inflation, prompting investors to dial down their bets for Fed monetary easing in the near-term.
• US Initial Jobless Claims declined to 198K, in the week ending January 10, from 207K in the previous week, against the market expectations of an increase to 215K.
• The New York Empire State Manufacturing Index bounced up to a 7.7 reading in January following a 3.7 decline in December. This month's reading beat expectations of a more moderate improvement to 1, which shows a significant strengthening in the sector's business conditions.
• Likewise, the Philadelphia Fed Manufacturing Survey jumped to 12.6 in January from the -8.8 of the previous month, also beating expectations of a -2 reading. New orders and shipments moved higher, the employment index decreased, although showing an overall improvement from previous months, while prices remained above long-run averages.
• In this context, hawkish comments by Fed policymakers provided additional support to the US Dollar. Atlanta Fed President Raphael Bostic and Kansas Fed President Jeffrey Schmid reiterated the need to keep interest rates at restrictive levels as inflationary pressures remain high.
• In the Eurozone, on Friday, Germany's final Harmonized Index of Consumer Prices confirmed that inflation eased to 0.2% in December and to 2.0% in the previous 12 months, after -0.5 and 2.6% respective readings in November. The Euro ticked up from lows following the data release.

Technical Analysis: EUR/USD hovers at six-week lows with support at 1.1590

EUR/USD trades at 1.1610, hovering near the bottom of the descending channel from late December highs. The Moving Average Convergence Divergence (MACD) slips below the zero line on the 4-hour chart, fading momentum, and the Relative Strength Index (RSI) sits at 36 on the same time frame, underscoring the bearish trend.

Immediate support is at Thursday's low, near 1.1590, and the mentioned channel's bottom, now at the 1.1585 area. Further down, the target is the late-November lows near 1.1560. On the upside, previous support at 1.1621 (January 12 lows), is holding bulls for now ahead of the channel top in the 1.1670 area.

(The technical analysis of this story was written with the help of an AI tool.)