EUR/USD Update: Breaking Down the Current Market Trends
- The Hamburg Commercial Bank releases revised Eurozone PMIs for December.
- US Dollar weakens on talks of narrower tariff plans by the Trump administration.
- EUR/USD sees gains amidst positive market sentiment, facing resistance around 1.0430.
The EUR/USD pair is showing upward movement at the start of the week, hovering near an intraday high of 1.0431 reached during European trading hours, driven by an improved market outlook.
Eurozone PMIs and US Tariff Talks Impacting Market Sentiment
Despite positive data from the Eurozone, with slightly better than expected services output in the final December PMI report by the Hamburg Commercial Bank, the overall Composite PMI still indicates contraction at 49.6. Factors contributing to this soft figure include shrinking activity levels, decreased new business and employment, and rising inflationary pressures. However, there is a slight improvement in firms’ growth expectations for the next 12 months.
On the other hand, the US Dollar faced selling pressure following reports that the Trump administration is considering narrower tariff plans focusing on strategic sectors like defense, medical supplies, and energy. This news eased concerns about universal tariffs and contributed to the weakening of the US Dollar across FX markets.
Looking ahead, key economic data to watch includes the preliminary estimate of the German Harmonized Index of Consumer Prices (HICP) and US November Factory Orders, along with the final December US Services and Composite PMIs by S&P Global.
Technical Analysis of EUR/USD
In the daily chart, the EUR/USD pair is consolidating near 1.0400, facing resistance at 1.0430 from the 20 Simple Moving Average (SMA). The 100 and 200 SMAs are converging around 1.0800 with downward slopes, while technical indicators show upward momentum within negative levels.
On the 4-hour chart, EUR/USD is bullish but encountering resistance at the 100 SMA near the intraday high. Support is found at the flat 20 SMA around 1.0325, with technical indicators signaling continued upward movement.
Support levels: 1.0370, 1.0325, 1.0280
Resistance levels: 1.0430, 1.0475, 1.0510
Analysis and Implications for Investors
The current market dynamics in the EUR/USD pair reflect a mix of Eurozone economic data and US geopolitical factors. Investors should monitor upcoming economic releases and geopolitical developments to assess potential impacts on currency markets. With the EUR/USD pair showing bullish momentum but facing resistance levels, traders should consider key support and resistance levels for strategic entry and exit points.