EUR/USD falls marginally from 1.0970 on steady German HICP data, US data eyed

• EUR/USD falls gradually as investors turn cautious ahead of US private Employment data.
• German HICP grew strongly by 3.8% in December as anticipated against 3.2% jump in November.
• Fed policymakers remain worried about over-tightening of interest rates.

The EUR/USD pair struggles to extend recovery above three-day high of 1.0970 in the late European session. The major currency pair remains mostly unchanged as preliminary German Harmonized Index for Consumer Prices (HICP) for December rose as expected.

Monthly HICP grew at a slower pace of 0.2% against the consensus of 0.3% increase. In November, price pressures were contracted by 0.7%. The annual HICP rose to 3.8% as expected against earlier growth of 3.2%.

This may force European Central Bank (ECB) policymakers to stick to keeping interest rates unchanged further.

S&P500 futures have added significant gains in the European session. US equities were heavily sold-off in the last two trading sessions and meaningful gains in overnight futures are indicating some recovery in the risk-appetite of the market participants.

The US Dollar Index (DXY) corrects to 102.20 after a sharp recovery as investors turn cautious ahead of the United States ADP Employment Change data for December, which will be published at 14:00 GMT.  As per the consensus, 115K new workers were recorded by the labour market against 103K additions in November.

Meanwhile, deepening prospects of rate cuts by the Federal Reserve (Fed) this year have strengthened as Federal Open Market Committee (FOMC) minutes for December monetary policy meeting indicated that policymakers were worried about ‘over-tightening’ of interest rates.