- EUR/USD price remains bearish below 1.1700 as the dollar recovers after upbeat data.
- Disappointed German retail sales data weighs on the euro.
- Markets await Friday’s NFP data for a decisive directional bias.
The EUR/USD price stays under pressure, extending its decline for a third consecutive session as the US dollar finds support from upbeat data. The pair trades under the 1.1700 level as the balance of risks now favors the greenback ahead of Friday’s NFP data.
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The immediate trigger for the downtick move was the US services sector, with ISM Services PMI surging to 54.4 in December, revealing a resilient US economy. Moreover, the employment component also returned to expansion, easing fears of a labor market slowdown. Although ADP employment and JOLTs data indicate a slight cooling, they are not yet weak enough to offset the resilience. Resultantly, the Dollar Index (DXY) edged up, creating a headwind for the EUR/USD.
On the European side, the macroeconomic front offered slight support to the euro, with Eurozone inflation slowing to 2% YoY, meeting the ECB’s target. Meanwhile, downbeat Germany’s retail sales data pointed out that inflation is no longer a concern for policymakers. This reduces urgency for rate hikes but limits the euro’s appeal when the US economy starts showing signs of recovery.
On the other hand, the US Fed’s December rate cut did not convince markets that policymakers would pursue aggressive easing ahead, as they remained split, while Chair Powell emphasized the importance of patience and data dependency. Markets are pricing in only gradual cuts this year, keeping the US yields higher, which in turn supports the dollar.
Looking ahead, attention shifts to upcoming data on both sides of the Atlantic. Eurozone sentiment indicators and producer prices may offer some impetus. However, the spotlight remains on Friday’s Nonfarm Payrolls. A clear downside surprise could weaken the Dollar and allow EUR/USD to stabilize above recent lows. Until then, the pair looks vulnerable to further consolidation or mild downside.
EUR/USD Technical Price Analysis: Bears Held by 200-MA
The EUR/USD 4-hour chart reveals a downtrend, supported by the 200-period MA near 1.1670, while staying below the 20-period MA and 50- and 100-period MAs, making a bearish crossover.
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The RSI remains flat around 40.0, indicating a gradual bearish momentum. On breaking below the 1.1670 level, the price could test the horizontal support at 1.1620 ahead of 1.1620. On the upside, the price could test resistance at 1.1700 ahead of the swing high and the MA confluence at 1.1720.
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