EUR/USD Holds Below 1.0900: Focus on German Trade Balance and ECB’s Lagarde Speech

• The EUR/USD pair is holding steady in positive territory near 1.0890, benefiting from the weaker USD.
• US ISM Manufacturing PMI for November came in flat at 46.7, falling short of expectations.
• A European Central Bank (ECB) policymaker has stated that the central bank is not considering lowering borrowing costs now, but may consider it later in 2024.
• Traders will be closely watching the German Trade Balance data and ECB President Christine Lagarde’s speech for further market cues.

During the early Asian trading hours on Monday, the EUR/USD pair has managed to break a three-day losing streak. The uptick in the pair is primarily driven by the weaker US Dollar (USD) and lower US Treasury bond yields. At present, EUR/USD is trading near 1.0890, up 0.10% for the day.

Last Friday, dovish comments from Federal Reserve (Fed) Chairman Jerome Powell dragged the Greenback lower. Powell hinted at a potential easing of the Fed’s policy in 2024, signaling an end to the cycle of interest rate hikes. This has provided some relief to the markets amid concerns about the central bank’s tightening monetary policy.

In contrast, the US manufacturing sector continues to show weakness, with the US ISM Manufacturing PMI remaining steady at 46.7 in November, below market expectations. The Manufacturing Employment Index also declined, while Prices Paid and New Orders Index saw marginal improvements.

Elsewhere, an incident in the Red Sea involving an attack on American warships and commercial vessels has raised fears of escalating tensions between Israel and Hamas, potentially boosting safe-haven demand for the USD.

Looking ahead, market participants are closely eyeing the German Trade Balance data for October and ECB President Christine Lagarde’s speech, which could provide further direction to the EUR/USD pair.