EUR/USD Price Forecast: Bears gain ground, lower lows ahead

EUR/USD Current price: 1.1607

• Increased uncertainty pushes the US Dollar marginally higher.
• EU and US upbeat macroeconomic data not enough to lift the market’s mood.
• EUR/USD gains downward traction, critical support at 1.1590

The EUR/USD pair eases within range, trading near a fresh January low in the 1.1600 threshold early American session on Thursday. The pair has been grinding lower, although the momentum is missing despite political and macroeconomic headlines.

On the one hand, Europe has nothing to surprise financial markets, with local data indicating the EU economy is progressing at a slow pace, though at least, while inflation remains stable around the European Central Bank (ECB) 2% goal.

On the other hand, too much is going on in the United States (US), resulting in skyrocketing uncertainty and, hence, limiting US Dollar (USD) demand. Tensions between US President Donald Trump and Federal Reserve (Fed) Chair Jerome Powell reached a zenith after the Department of Justice served the Fed with grand jury subpoenas, threatening a criminal indictment of Powell.

Still, and given that Powell’s mandate ends in May, market players seem more concerned about who will take the Chair afterwards, something President Trump has promised to announce for months, but still has not done. In the meantime, inflation in the US remains sticky and above the central bank’s goal, which only maintains the conflict and the related uncertainty firmly in place.

Beyond the Fed-White House battle, the US President is involved in different international conflicts, from Venezuela to Iran, adding fuel to the fire. The lack of clarity makes the USD unattractive. It’s a wait-and-see until something breaks the stalemate one way or the other.

Data-wise, the EU published November Industrial Production, which rose at a seasonally adjusted pace of 0.7% MoM, matching the October reading. The Trade Balance posted a worse-than-anticipated surplus in the same month, reporting €9.9 billion against the expected €15.2 billion and below the previous €17.9 billion.

Across the pond, the US released some minor yet encouraging figures. Initial Jobless Claims rose by 198K in the week ended January 10, improving from the 207K posted in the previous week. Also, the Philadelphia Fed Manufacturing Survey printed at 12.6 in January, following a revised -8.8 in December

EUR/USD short-term technical outlook

In the 4-hour chart, EUR/USD is bearish. The pair is trading below all its moving averages, with the 20-period Simple Moving Average (SMA) gaining downward traction below the 200 and 100 SMAs, reinforcing a bearish setup. The 20 SMA at 1.1651 is capping the immediate bounce. Meanwhile, the Relative Strength Index (RSI) indicator gains downward strength at around 31, while the Momentum indicator edges sharlpy lower within negative levels, consistent with the weak tone.

In the daily chart, EUR/USD is also poised to extend its decline. The 20-day SMA has turned lower above the 100-day SMA, with the pair unable to advance beyond the latter. Initial resistance aligns at the 100-day SMA at 1.1665, with the 20-day SMA higher at 1.1713, while the 200-day SMA at 1.1583 acts as immediate support. At the same time, the Momentum indicator slips deeper below its midline and continues to deteriorate, signaling strengthening bearish pressure. Finally, the RSI indicator sits at 34, reinforcing bearish bias.

(The technical analysis of this story was written with the help of an AI tool.)