The EUR/USD currency pair has shown resilience, trading at approximately 1.1773 as the American session commenced. This marks a continuation of its upward trajectory, driven by a combination of economic indicators that have contributed to a weakening US Dollar.
Despite a series of disappointing economic reports from Europe, the Euro has managed to hold its ground. The latest flash estimates from the Hamburg Commercial Bank revealed that the EU’s Purchasing Managers’ Index (PMI) for December fell short of expectations, indicating a slowdown in business activity for the second consecutive month. The manufacturing PMI stood at 47.7, while the services PMI was at 52.6, down from previous readings of 48.2 and 53.1, respectively. This resulted in a composite PMI of 51.9, a decline from 52.8 in November.
Moreover, Germany’s ZEW Economic Sentiment survey reported an improvement to 4.8 in December from minus 38.5 the previous month, although the current situation assessment worsened to -81 from -78.7. In contrast, the overall Economic Sentiment in the EU surged to 33.7, up from 25.0 in November.
On the US side, data released on the same day added further pressure to the dollar. The Nonfarm Payrolls report indicated that 64,000 jobs were added in November, recovering from an October loss of 105,000. However, the unemployment rate rose to 4.6%, surpassing both previous and forecasted figures of 4.4%. Additionally, the ADP Employment Change report showed an average of 16,250 new positions added in the week ending November 29, a significant increase from 4,750 the prior week.
The EUR/USD pair briefly touched 1.1800 before retreating, yet it maintained a bullish bias. As of now, the pair trades firmly in the 1.1770 area, reflecting a positive outlook.
Technical Analysis of EUR/USD
Examining the short-term technical outlook, the EUR/USD pair peaked at 1.1794 before settling back. The 4-hour chart indicates a strong bullish sentiment, with the 20-period Simple Moving Average positioned above both the 100 and 200 SMAs, suggesting upward momentum. The price remains above these averages, with the 20 SMA providing support at 1.1744.
In terms of momentum, both the Momentum indicator and the Relative Strength Index (RSI) are indicating strengthening buying pressure, with the RSI currently around 69.2. On the daily chart, the EUR/USD is consistently trading above its moving averages, with the Momentum indicator stabilizing above its midline. The RSI shows a value of 72, maintaining an upward trajectory.
As the market continues to react to these economic indicators, the outlook for the EUR/USD pair remains cautiously optimistic, with support levels indicating potential for further gains.
Market participants are advised to monitor upcoming data releases closely, as they will play a crucial role in shaping the future direction of the Euro against the US Dollar.
