Parity looms for the Euro

The Euro remains under selling pressure, remaining around a yearly low against the greenback as we gear up to enter the European trading session amid growing calls from analysts that the EUR/USD currency pair is once again headed towards parity.

In yesterdays news, the Job Openings and Labor Turnover Survey (JOLTS) showed that the number of job openings for August stood at 9.6 million from the previous month of 8.9 million which hwas revised from 8.8 million. The figure beat analysts expectations for a number of 8.8 million and caused the US dollar index to surge above 107.10 while US Treasury yields traded higher. The 10-year yield reached 4.82%, the highest since 2007.

Cleveland Federal Reserve President Loretta Mester stated on Tuesday that she is likely to favor an interest rate hike at the next meeting if the current economic situation holds while mentioning that the Fed is likely at or near its peak regarding interest rate hikes

On the other hand, Atlanta Fed President Raphael Bostic said he will be patient and noted that the rate hiking cycle in the US may have indeed ended. That said, the better-than-expected US economic data, higher yield, and cautious mood in the market lift the Greenback against its rivals and act as a headwind for the EUR/USD pair.

On the Euro front, markets are largely anticipating no interest rate hike from the European Central Bank (ECB) soon which basically means that the rate hiking cycle in Europe is over. On Tuesday, ECB Governing Council member Tuomas Välimäki said that central bank policymakers don't see a stagflation prospect in the euro area while ECB Chief Economist, Philip Lane commented that the ECB is not yet at the inflation target, more work needs to be done.

Looking ahead, market participants will monitor the Eurozone Producer Price Index (PPI) and Retail Sales for August due on due out later today. The annualized PPI figure is expected to fall from -7.6% to -11.6%, while the Retail Sales are expected to drop, from -1% to -1.2%. Also, the US ADP Employment Change and ISM Services PMI will be released later in the Amercan session.

While the above news is seen as important, it pales in comparison to the highly-anticipated US Nonfarm Payrolls which are due to hit the market on Friday and will play a major part in deciding if infact the Fed is done with their rate hiking cycle.