EUR/USD marginally recovers post-Fed’s meeting, amid strong US PMIs

• EUR/USD recovers to 1.0817 following Fed's steady rate decision and Powell's inflation comments.
• Contrasting US economic indicators: rising jobless claims but increased business activity per S&P Global.
• Eurozone inflation downtrend impacts ECB rate cut outlook; focus remains on Fed's future rate moves.

The EUR/USD trims some losses, though it remains virtually unchanged after the US Federal Reserve (Fed) decided to hold rates unchanged and shrugged off market bets to cut rates in March. Nevertheless, the US central bank is looking forward to easing policy. At the time of writing, the pair exchanges hands at 1.0817 after testing the 100-day moving average (DMA) at 1.0780.

Euro stabilizes following Fed’s decision

Fed Chair Jerome Powell spoke after the FOMC’s decision, emphasized that its too early to declare victory on inflation, and while acknowledging that prices are indeed headed lower, a rate cut in March is off the table.

The US Bureau of Labor Statistics recently revealed that Initial Jobless Claims for the last week rose 224K, exceeding the previous reading of 215K and forecasts of 215K. The data suggests the labor market is cooling amid a period in which US companies announced plans to cut over 82,300 jobs in the last month, as mentioned by Bloomberg.

Meanwhile, business activity is gaining traction in the US, revealed S&P Global, as the Manufacturing PMI jumped from 47.9 to 50.7 on January´s final reading. Recently, the ISM Manufacturing PMI for January was released, it came at 49.1 at recessionary territory, but up from December, and exceeded forecasts of 47.

Across the Atlantic, inflation in the Eurozone, as measured by the Harmonized Index of Consumer Prices (HICP), rose 2.8% YoY in January, down from 2.9%. The Core HICP dived from 3.4% to 3.3%, but missed forecasts of 3.2%.

Interest rate expectations for the ECB and the Fed

Rate cut expectations for the European Central Bank (ECB) for an April rate cut stand at 89%, while for June is fully priced in. In the case of the Federal Reserve, futures traders had fully priced in a cut in May and June.

EUR/USD Price Analysis: Technical outlook

With prices having dipped to the 100-DMA, the EUR/USD stages a recovery back above the 1.0800 figure. Further upside is seen if buyers reclaim the 200-DMA at 1.0839. After that, the next resistance would be the psychological 1.0900 mark. On the other hand, if the exchange rate slips below 1.0800, further downside is seen at the 100-DMA at 1.0780, before challenging the December 8 low of 1.0724.