EUR/USD Analysis: Key Insights for Investors
European Central Bank Decision:
- The ECB lowered benchmark interest rates by 25 bps as expected.
- The removal of the word “restrictive” from the monetary policy statement is a notable change.
- The ECB remains confident in the disinflation process and sees inflation settling around the 2% target.
The EUR/USD pair faced selling pressure, hitting fresh weekly lows as the European Central Bank (ECB) made its anticipated interest rate cut. Despite the expected move, the pair struggled to gain momentum in the face of a strong US Dollar and market uncertainties.
US Economic Data:
- US Initial Jobless Claims for December 6 came in higher than expected at 242K.
- November Producer Price Index (PPI) showed an unexpected uptick in inflation at wholesale levels.
These negative surprises in US economic data have contributed to the strengthening of the US Dollar and added pressure on the EUR/USD pair.
Market focus now shifts to ECB President Christine Lagarde’s press conference for further insights on future monetary policy decisions.
EUR/USD Technical Analysis:
On the daily chart, EUR/USD is trading below the 20 SMA, with the 100 and 200 SMAs indicating a bearish bias. Technical indicators are inconclusive, with the Momentum indicator showing a modest uptick and the RSI hovering around 39.
Looking at the 4-hour chart, sellers remain in control as EUR/USD stays below all moving averages. The convergence of the 20 and 100 SMAs around 1.0530 adds to the bearish sentiment, with technical indicators supporting further downside momentum.
Key Levels to Watch:
- Support levels: 1.0460, 1.0410, 1.0375
- Resistance levels: 1.0530, 1.0570, 1.0625
Overall, the EUR/USD pair faces downward pressure due to the ECB rate cut and positive US economic data. Investors should monitor key levels and technical indicators for further insights into potential market movements.