EUR/USD rises to near 1.0950 on improved German, Eurozone PMI data

• EUR/USD gains ground on the decline of the US Dollar.
• Eurozone Composite and Services PMI improved to the figures of 47.6 and 48.8, respectively.
• The decline in the US bond yields weakens the Greenback.

EUR/USD recovers the recent losses registered in the previous two sessions. The EUR/USD pair trades higher around 1.0950 during the European trading hours on Thursday. The improved Purchasing Managers Index (PMI) data from Germany and the Eurozone contributed support to underpinning the Euro (EUR) against the US Dollar (USD).

German HCOB Composite and Services PMI for December improved to the readings of 47.4 and 49.3, respectively. While Eurozone Composite and Services PMI improved to the figures of 47.6 and 48.8, respectively, for the said month. Furthermore, German Consumer Price Index (CPI) data is due to be released later in the day.

The US Dollar Index (DXY) retraces some of its recent gains, influenced by a decrease in United States (US) Treasury yields. At the time of writing, the DXY trades lower around 102.30, with the 2-year and 10-year yields hovering around 4.30% and 3.91%, respectively.

The better-than-expected ISM Manufacturing PMI data might have contributed some support to strengthening the US Dollar. The report revealed an increase to 47.4 in December from the previous reading of 46.7, exceeding the market consensus of 47.1. However, a contrasting trend was observed in JOLTS Job Openings, which decreased to 8.79M, falling short of the expected figure of 8.85M in November.

Additionally, the December minutes of the Federal Open Market Committee (FOMC) indicate that participants believe the policy rate has either peaked or is near its highest point in the current tightening cycle. Despite this observation, they highlight that the exact path of the policy will depend on how the economic conditions evolve.

The upcoming focus in the market will be on Thursday's labor market data releases from the United States. The anticipated US ADP Employment Change for December is expected to show an increase to 115K from the previous figure of 103K. Additionally, Initial Jobless Claims for the week ending on December 29 are expected to ease to 216K from the prior reading of 218K.