The EUR/USD pair showed a sluggishly bullish tone on Monday, briefly hovering near the 1.0500 mark, though it lacked conviction. With limited European data this week, traders are instead focusing on a busy economic calendar in the US.
European Central Bank (ECB) officials’ remarks at the start of the week went largely unnoticed, as the latest European data revealed mixed results. December PMI figures surpassed expectations, but Services PMI surveys remain in contraction, reflecting concerns about a worsening economic slowdown in Europe that continues to unsettle investors and businesses.
Markets are now turning their attention to the US Federal Reserve’s rate decision on Wednesday, with a 25 basis point rate cut nearly fully priced in (99.1%) according to the CME’s FedWatch Tool. Traders will also be closely watching the Fed’s updated Summary of Economic Projections (SEP) and any signals from policymakers on future rate moves.
US PMI data for December painted a mixed picture: while Services PMI surged to multi-year highs, the Manufacturing PMI dropped further below the 50.0 mark, indicating contraction. Retail Sales data set for release on Tuesday is expected to garner less attention, given the focus on the Fed’s final rate decision of the year.
EUR/USD Price Outlook
From a technical perspective, the EUR/USD daily chart continues to show a bearish trend, with the pair trading below both the 50-day EMA at 1.0659 and the 200-day EMA at 1.0810. These downward-sloping moving averages confirm persistent selling pressure, with the euro struggling to gain significant ground against the dollar. The MACD indicator remains subdued, with its signal line staying below zero, indicating weak momentum and caution among buyers.
Although the latest candle shows a slight rebound, with EUR/USD closing at 1.0517, the pair has failed to break convincingly above the 1.0550 resistance zone, suggesting limited upside potential. If the euro gains momentum, a retest of the 50-day EMA near 1.0660 could be possible. However, failure to sustain the rebound could expose the pair to renewed selling pressure, with support at 1.0450 becoming a key level to watch. The overall sentiment remains bearish unless a decisive break above key resistance levels occurs.
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