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EUR/USD Current Price: 1.0601
- EU S&P Global Services PMIs were upwardly revised for December, providing mild support to the EUR.
- The US FOMC Meeting Minutes showed that policymakers are still concerned about inflation.
- EUR/USD lacks bullish strength as it struggles to retain the 1.0600 threshold.
The EUR/USD pair changed course once again and finished the day on the positive side at around 1.0600. The US Dollar came under selling pressure during Asian trading hours amid resurgent optimism fueling demand for high-yielding assets. The focus was once again on China, and the potential economic recovery the country will experience after dropping its zero-covid policy. Headlines suggesting China will resume imports of Australian coal were the initial catalyst of the US Dollar decline.
The pair topped during European hours at 1.0635, spending the rest of the day at around 1.0600, as investors await the FOMC Meeting Minutes. The document showed that policymakers remain concerned about inflation risks, and while they welcomed easing price pressures in October and November, are still taking monetary policy decisions on the base of price pressures. There were no clues on the extent of a potential February rate hike. Following the release of the document, the EUR/USD pair eased modestly but remains around the aforementioned threshold.
On the data front, S&P Global published the final estimates of its December PMIs. The German Services PMI was upwardly reported to 49, while that for the Euro Zone was confirmed at 49.8, suggesting the EU has left the worst behind. The reports indicated that price pressures remained elevated but retreated further from their recent peaks. The encouraging news provided mild support to the EUR.
The United States December ISM Manufacturing PMI shows that business output contracted by more than anticipated in December, as the index printed at 48.4, missing expectations of 48.5 and below the previous 49. On a positive note, the November JOLTS Job Openings report showed demand for employment remained high as 10.46 million positions were available in the month.
On Thursday, Germany will publish the November Trade Balance, while the Euro Zone will release the Producer Price Index for the same month. In the US, the focus will be on employment, as the country will release the ADP Employment Change report ahead of the Nonfarm Payrolls one on Friday, and the usual weekly unemployment figures.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair shows that it trades around its 20 Simple Moving Average (SMA) while the 100 and 200 SMAs remain directionless well below the shorter one. At the same time, the Momentum indicator remains flat below its 100 level, while the Relative Strength Index (RSI) gains upward traction within neutral levels. Overall, the risk skews to the upside as long as the pair holds above the 23.6% Fibonacci retracement of the September/December rally at 1.0450.
According to the 4-hour chart, the chance of a bullish extension remains limited. A bearish 20 SMA contained advances, providing dynamic resistance at around 1.0640. The 100 SMA stands directionless a few pips below the shorter one, reinforcing the resistance area. Finally, technical indicators remain directionless within negative levels, skewing the risk to the downside without confirming it.
Support levels: 1.0560 1.0510 1.0450
Resistance levels: 1.0640 1.0695 1.0740
View Live Chart for the EUR/USD
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