On Monday, the EUR/USD pair dipped below the 1.0400 threshold, reflecting a subdued market mood during the year-end holiday period. With trading volumes reduced and investors refraining from bold moves, risk appetite has waned, causing most asset classes to trend toward the lower bounds of their recent ranges.
German Economic Indicators and Market Closures
German stock markets will remain closed on Tuesday and Wednesday for New Year’s Eve and New Year’s Day celebrations. On Thursday, the final HCOB Manufacturing Purchasing Managers Index (PMI) for Germany is set for release, though the data is not expected to drive significant market activity for the Euro.
Labor statistics for Germany, including December’s Unemployment Change, projected to rise to 15,000 from 7,000, will be announced on Friday. These figures could offer insights into the health of the German economy but are unlikely to alter the broader bearish sentiment surrounding the Euro.
Key US Data and Fed Signals
The market’s primary focus this week will be the US ISM Manufacturing PMI for December, scheduled for release on Friday. A marginal dip to 48.3 from 48.4 is anticipated. Meanwhile, several Federal Reserve officials are slated to speak later in the week, aiming to clarify recent adjustments to the Fed’s 2024 interest rate outlook. These statements could influence market sentiment, especially concerning the Euro-Dollar pairing.
EUR/USD Technical Outlook
EUR/USD has rebounded toward the lower end of the 1.0400 range, with the recent support level near 1.0350 emerging as a key threshold. Since peaking just above 1.1200 in September, the pair has steadily declined.
While it has yet to breach the mid-November low of 1.0332, the pair is poised to finish in the red for a fifth consecutive week. On a broader timescale, EUR/USD has closed lower in all but two of the past 13 weeks, underscoring persistent bearish momentum.
Market participants will closely monitor both technical levels and fundamental developments as the week progresses.
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