Euro remains depressed near one-month lows, US Consumer sentiment data on focus

• The Euro remains flat above 1.0845 with the broader bearish trend intact.
• The strong US data seen this week has dampened hopes of Fed cuts, boosting the US Dollar. 
• ECB President Lagarde discards rate cuts before next summer, which has provided some support to the Euro.

The Euro (EUR) is trading within a tight range, unable to put a significant distance from the one-month lows at 1.0845 on Friday’s European trading session. The strong US macroeconomic data seen this week have forced investors to reassess their interest rate expectations, which has boosted the US Dollar across the board.

Data released on Thursday revealed that US initial jobless claims declined against expectations in the week of January 12. These figures confirm the picture of a resilient US economy shown by the strong Retail Sales seen earlier this week and suggest that the Federal Reserve (Fed) has still some work to do to bring inflation to the target level.

On the calendar today, European Central Bank (ECB) President Christine Lagarde will speak for the last time before the two-week blackout ahead of January’s monetary policy meeting.

In the US, the Michigan Consumer Sentiment Index and the University of Michigan Consumer Inflation expectations will focus the attention. Somewhat Later San Francisco Fed President, Mary Daly, might give some more info about the bank’s monetary policy outlook. 

Daily digest market movers: Euro hovers near one-month lows, weighed by USD strength

• The Euro is hesitating above the 1.0845 support area as the US Dollar strengthens with investors scaling back hopes of Fed cuts.
   
• US Jobless claims eased to 187K in the week of January 12, down from 203K in the previous week and against expectations of an increase to 207K.
   
• US Unemployment levels corroborate the resilience of the US economy pouring more cold water on investor’s hopes of Fed cuts in March.
   
• The ECB monetary policy accounts released on Thursday reflect the policymakers' conviction that inflation is subsiding, however, rate cuts are still off the table.
   
• ECB President Lagarde affirmed at the Davos World Economic Summit that the bank will not cut rates until next summer.
   
• Atlanta Fed President, Raphael Bostic does not see interest rate cuts coming until the third quarter.
   
• The CME Group FedWatch Tool shows a 55% chance of rate cuts in March, down from 75% last week.

Technical Analysis: EUR/USD remains biased lower with 1.0845 support holding bears for now

The EUR/USD remains practically flat on Friday and is on track for a 0.6% decline this week. The near-term bias is negative and the support level at 1.0845 is keeping the pair from further decline.

A clear break below 1.0845 would activate a bearish Head and Shoulders (H&S) pattern increasing negative pressure towards 1.0800 and 1.0725. The H&S measured target is the 78.6% Fibonacci retracement of the late 2023 rally, at 1.0600.

On the upside, Euro bulls are likely to meet a significant resistance at the 1.0920/30 area, where previous trendline support meets the confluence of the 4-hour 200 and 50 SMAs. Above here, the next target is 1.1000.