The EUR/USD pair continued its downward trajectory on Thursday, dropping a modest but persistent 0.6% to hold near the 1.0300 mark, approaching its 26-month lows. The bearish sentiment remains intact as the Euro faces mounting challenges against the strength of the US Dollar (USD).
Weak EU Retail Sales Data Weigh on Euro Sentiment
The Eurozone’s retail sales data for November came in worse than expected, further dampening any potential bullish momentum for the Euro. The annualized growth rate of EU retail sales slumped to just 1.2% YoY in December, significantly underperforming compared to the revised 2.1% increase in November. This miss on expectations adds to the growing concerns about economic growth in the Eurozone, which continues to limit the Euro’s ability to recover.
US Nonfarm Payrolls Looms Large on Friday
On the other side of the Atlantic, US markets were closed on Thursday for a day of mourning in observance of the passing of former President Jimmy Carter, but the calm before the storm is fleeting. Friday brings the highly anticipated US Nonfarm Payrolls (NFP) data, with expectations pointing to a slight easing in job additions for December. However, wage growth is expected to remain steady, which could further stoke inflation concerns. Stronger-than-expected job growth and wage increases could potentially undermine expectations for a 2025 rate cut by the Federal Reserve (Fed), as the central bank may feel less inclined to ease policy if inflationary pressures remain high.
EUR/USD Price Outlook: Bearish Bias Continues
The EUR/USD pair has now entered January with a fresh bearish push, and with the Euro under pressure, it’s poised for a fourth consecutive month in the red. Since the rejection from the 200-day Exponential Moving Average (EMA) near the 1.0900 region in November, the pair has declined by more than 6.5%, and the Euro is struggling to regain its footing. The bearish momentum is expected to persist in the short term, and traders will be watching closely for any signs of stabilization or reversal.
Immediate support for EUR/USD lies at the 1.0300 level, with further downside possible if the pair fails to hold this threshold. On the upside, resistance is expected around the 1.0400 region, where recent price action suggests a capped rebound. Market sentiment will largely be influenced by the upcoming NFP data and ongoing concerns about Eurozone growth.
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