EUR/USD Forecast: Euro recovery attempts could remain short-lived
- EUR/USD trades marginally higher on the day above 1.0500 on Monday.
- Flash PMI data from Germany, the Eurozone and the US will be scrutinized by investors.
- The pair could extend its recovery once it flips 1.0520 into support.
EUR/USD snapped a five-day losing streak on Friday but closed the previous week in negative territory. The pair clings small daily gains above 1.0500 as investors await macroeconomic data releases.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.60% | 0.87% | 2.43% | 0.49% | 0.29% | 1.07% | 1.49% | |
| EUR | -0.60% | 0.28% | 1.95% | -0.02% | -0.21% | 0.55% | 0.97% | |
| GBP | -0.87% | -0.28% | 1.49% | -0.30% | -0.49% | 0.27% | 0.68% | |
| JPY | -2.43% | -1.95% | -1.49% | -1.91% | -1.99% | -1.45% | -0.84% | |
| CAD | -0.49% | 0.02% | 0.30% | 1.91% | -0.15% | 0.57% | 0.99% | |
| AUD | -0.29% | 0.21% | 0.49% | 1.99% | 0.15% | 0.77% | 1.18% | |
| NZD | -1.07% | -0.55% | -0.27% | 1.45% | -0.57% | -0.77% | 0.40% | |
| CHF | -1.49% | -0.97% | -0.68% | 0.84% | -0.99% | -1.18% | -0.40% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The European Central Bank's (ECB) dovish tone and the broad-based US Dollar (USD) strength forced EUR/USD to stay on the back foot last week. The modest improvement seen in risk mood helps the pair hold its ground in the European morning on Monday.
Preliminary December HCOB Manufacturing and Services Purchasing Managers Index (PMI) data from Germany and the Eurozone will be watched closely by market participants. In case Services PMI rises above 50, either in the Eurozone or Germany, and reflect an expansion in the sector's economic activity, the immediate reaction could help the Euro find demand.
In the second half of the day, S&P Global PMI data will be featured in the US economic docket. If the Composite PMI unexpectedly drops below 50, the USD could come under renewed selling pressure.
Nevertheless, investors could opt to remain on the sidelines ahead of the Federal Reserve's (Fed) monetary policy announcements on Wednesday.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart rose slightly above 50, reflecting sellers' hesitancy. EUR/USD could face immediate resistance at 1.0520 (100-period Simple Moving Average (SMA), 50-period SMA, Fibonacci 23.6% retracement of the latest downtrend). If the pair stabilizes above this level and confirms it as support, it could target 1.0600 (Fibonacci 38.2% retracement) next.
On the downside, supports could be seen at 1.0440 (static level), 1.0400 (end-point of the latest downtrend) and 1.0330 (November 22 low).
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
