By Areena FxCurrent Price: 1.0496
Sentiment: Neutral to bearish
Support: 1.0460, 1.0410, 1.0375
Resistance: 1.0520, 1.0570, 1.0625
The EUR/USD pair remains under mild selling pressure as the US Dollar (USD) continues to find support amid higher US Treasury yields and a cautious market mood ahead of key central bank decisions. The Federal Reserve’s interest rate decision, due on Wednesday, is a primary driver of the market’s apprehension.
Key Data Highlights
European PMIs: Slowing Contraction
Preliminary December PMIs from the Eurozone pointed to ongoing economic contraction, though with some signs of improvement:
- Germany:
- Manufacturing PMI: Declined further to 42.5 from 43.0 in November.
- Services PMI: Rebounded slightly to 51.0 from 49.3.
- Composite PMI: Improved to 47.8 from 47.2, though still below the 50.0 threshold signaling growth.
- Eurozone:
- Composite PMI: Rose to 49.5 from 48.3, better than expected but still indicating contraction.
The overall data suggests persistent challenges in the private sector, despite some resilience in services activity.
Upcoming US Data
In the American session, markets will watch for the December NY Empire State Manufacturing Index and US S&P Global PMIs, which could provide insights into the health of the US economy heading into the Fed meeting.
Technical Analysis: EUR/USD Short-Term View
On the daily chart, EUR/USD maintains a neutral-to-bearish stance:
- Moving Averages:
- The 20-day SMA (currently at 1.0520) acts as intraday resistance.
- The 100-day and 200-day SMAs continue to trend downward, reinforcing bearish momentum.
- Indicators:
- The Momentum indicator remains flat near the 0 line, showing indecisiveness.
- The RSI holds near 41, favoring bearish sentiment without confirming a decisive move lower.
Key Levels to Watch:
- Support: A break below 1.0460 could open the door to further declines toward 1.0400–1.0420.
- Resistance: Bulls need to clear 1.0520 for any meaningful recovery, with additional resistance at 1.0570 and 1.0625.
Outlook:
EUR/USD is likely to remain under pressure ahead of the Federal Reserve’s decision, with technical and fundamental factors skewing risks to the downside. A decisive break below 1.0460 could accelerate losses, while any recovery remains capped unless the pair moves above 1.0520. Traders should monitor upcoming US data and central bank commentary for further clues.