- The strongest bearish trajectory for EUR/USD price action remains ahead of the release of important US employment data this week, along with the release of minutes from the US Federal Reserve’s latest meeting.
- Last week’s losses for the EUR/USD pair reached the 1.0224 support level, the lowest in more than two years, before stabilizing around 1.0307. currently, the US dollar remains the strongest amid a sudden shift by the US Federal Reserve to continue easing its policy under Trump.
Key factors influencing the Euro-Dollar this week
On the European side, according to the economic calendar, the focus will be on the publication of European inflation data. Eurozone data this week is likely to show a slight acceleration in price growth in December, above the European Central Bank’s 2% target. This reading, boosted by higher fuel prices, will coincide with data from Italy and follows reports from France and Germany in the previous 24 hours. All three economies are expected to experience faster inflation.
All in all, the measure of the European Central Bank on consumer price expectations will be published. Fewer officials are expected to make public appearances. Elsewhere in the eurozone, manufacturing orders and industrial production in Germany will be released on Wednesday and Thursday, respectively, each providing a final insight into the poor state of manufacturing in the region’s largest economy. France and Spain will announce equivalent production figures.
On the American side, all the focus will be on publishing data on jobs in the US. On a related note, U.S. jobs rose by 160,000 in December 2024 as the labor market overcame distortions caused by hurricanes and strikes in previous months, according to economists polled by Bloomberg. This would lead to average monthly US job growth near 180,000 by 2024 – below the previous three years, but in line with a strong labor market.
Overall, Friday’s monthly jobs data is unlikely to change Fed officials’ view that they can slow the pace of rate cuts amid a steady economy and inflation that is only gradually disappearing.
Trading Tips:
The Euro-Dollar downtrend is stronger and may persist for some time, so keep a close eye on the weakness of the Euro as this month will have a strong impact on the future performance of the currency pair.
The German economy continues to face headwinds
Undoubtedly, political and economic concerns from both Germany and France were among the strongest factors that weakened the euro against the US dollar, with losses stretching to the lowest level for the currency pair in more than two years. The German economy continues to face headwinds, including the upcoming German election, the country’s rising unemployment rate and the crisis in the German auto industry.
Overall, German leaders have so far failed to find answers to revive Germany’s ailing economy, which the German central bank expects will barely grow in 2025 after shrinking last year, according to its latest forecast. According to analysts, Germany’s GDP faces another year of contraction, so clarity in government leadership and a commitment to fiscal expansion will be critical to reviving the slowing economy and the valuation of the DAX stock index.
EUR/USD analysis today:
Dear Reader, the bearish trend of the EUR/USD pair remains the strongest, and its recent losses have been enough to push the technical indicators towards oversold levels. As we mentioned earlier, the recent move has increased expectations that the EUR/USD pair is closer than previously expected. Moreover, the euro-dollar may remain under selling pressure until there is clarity regarding the future of central bank policy and the new US administration. Currently, the nearest support levels for the EUR-USD are 1.0245, 1.0180 and 1.0070 respectively. Technically, the technical indicators are in a strong bearish position. Finally, we still prefer to sell the currency pair from each upside level.
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