EUR/USD dips below 1.14, focus on US unit-labor costs

EUR/USD again sees a shallow bounce from the 200-week MA.
A below-forecast German factory orders print may bolster fears of a deeper economic slowdown in Eurozone.
A strong US unit-labor costs data may revive Fed rate hike talk, sending the USD higher across the board.

Omkar Godbole FXStreet Contributor

EUR/USD is currently trading just below 1.14, having clocked a high of 1.1514 last week.

The pair is increasingly looking heavy, having faced repeated rejection at 1.15, despite the persistent defense of the 200-week moving average (MA) over the last six months.

The 10-week moving average (MA), currently at 1.1386, could be breached if the German factory orders for December, due at 07:00 GMT, miss expectations by a big margin, making Germany more vulnerable to a recession.

Focus on US unit-labor costs

The unit-labor costs are forecast to have risen 1.7 percent in the fourth quarter, following a 0.9 percent rise in the third quarter.

Unit-labor costs are one of the key inflation numbers that the Federal Reserve monitors closely.

A weaker-than-expected print would validate Fed's patience on rate hikes and could put a bid under EUR/USD.

However, if the data matches or beats expectations, then markets may begin considering the possibility of a single 2019 rate hike. In that case, treasury yields will likely spike, lifting the greenback higher across the board.

EUR/USD pivot points

1. R3 1.1494
2. R2 1.1473
3. R1 1.1443
PP 1.1422
1. S1 1.1392
2. S2 1.1371
3. S3 1.1341

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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