The EUR/USD currency pair is trading in a thin and flat manner near the 1.0500 handle. Bulls are facing difficulties in making significant progress. On Monday, it showed a sluggishly bullish note, moving into the high end of the near-term consolidation just above 1.0500. But there is a clear lack of conviction.
Key Events and Data This Week
Fed Rate Call and US Data
Another Federal Reserve rate call is scheduled this week. Also, other important US data will keep the focus on the US side. The Fed is expected to cut rates for a third consecutive meeting on Wednesday. The markets have almost fully factored in a 25 basis points rate cut, with a 99.1% probability according to the CME’s FedWatch Tool. Traders will closely watch the Fed’s revised Summary of Economic Projections and the interest rate predictions from policymakers.
US PMI Data
The US PMI data for December presented a mixed picture. The Services PMI reached multi-year highs. But the Manufacturing PMI dropped further below 50.0, showing a contraction. Retail Sales figures will be released on Tuesday. However, it may not get much market attention as the focus is on the Fed’s final rate decision of the year.
European Data and Market Reactions
European Central Bank Officials’ Appearances
Markets mostly ignored the appearances of multiple European Central Bank officials at the start of the new week.
European December PMI Figures
The European December PMI figures were better than expected. But the Services PMI surveys are still in contraction. This is because of concerns over a deepening economic slowdown in Europe. It continues to bother investors and businesses.
EUR/USD Price Forecast
Daily Chart Analysis
The EUR/USD daily chart shows an overall bearish trend. The pair is trading below both the 50-day EMA at 1.0659 and the 200-day EMA at 1.0810. The downward-sloping moving averages show there is sustained selling pressure. The euro has not been able to gain back much ground against the dollar. The MACD indicator is weak. Its signal line is below zero, which means there is little momentum and buyers are being cautious.
Recent Candle and Resistance/Support Levels
The most recent candle shows a small bullish move. EUR/USD closed a bit higher at 1.0517. It was a small rebound after several sessions of sideways movement. But the pair can’t break above the 1.0550 resistance zone in a convincing way. So, there may not be much upward movement in the near term. If buyers get stronger, a retest of the 50-day EMA near 1.0660 could happen. If the rebound doesn’t last, the pair may face new selling pressure. The support at 1.0450 may then become important. The overall feeling is bearish until the pair clearly breaks above key resistance levels.
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