EUR/USD Price Forecast: Bulls take control, aim to reconquer 1.0400

EUR/USD Current price: 1.0387

• Market talks about President-elect Donald Trump's tariffs led the way.
• European data signaled the local economy is still struggling to recover.
• EUR/USD aims to extend gains beyond 1.0400 in a risk-on market environment.

The EUR/USD pair hovers in the 1.0380 price zone, holding on to substantial intraday gains after peaking at 1.0431 ahead of the American opening. The US Dollar (USD) fell on headlines from the Washington Post reporting that Donald Trump's transition team was working on tariffs. According to people familiar with the matter, tariffs would focus on key sectors deemed vital to national security, such as defence,  medical supplies, and energy.

President-elect Trump then denied the headlines, spurring fresh USD demand, yet not enough to sour the mood: European and American stocks edged higher, keeping EUR/USD on the winning side.

On the data front, the Hamburg Commercial Bank (HCOB) released the final estimates of the Eurozone December Purchasing Managers’ Index (PMI), showing services output was slightly better than previously anticipated, confirmed at 51.6 from a preliminary estimate of 51.4. The Composite PMI resulted at 49.6, slightly better than the 49.5 expected, yet still indicating contraction. Also, Germany published an update on the Consumer Price Index (CPI), which rose to 2.6% on a yearly basis in December from 2.2% in November, surpassing the 2.4% expected.

The United States (US) released  November Factory Orders, which declined by 0.4% in the month after adding 0.5% in October. Finally, S&P Global released the final estimates of the December US Services and Composite PMIs, which were downwardly revised to 56.8 and 55.4, respectively.

The focus on Thursday will be on the preliminary estimates of the Eurozone December Harmonized Index of Consumer Prices (HICP) and the official US ISM Services PMI, foreseen at 53.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for EUR/USD shows the bullish potential is still limited. A bearish 20 Simple Moving Average (SMA), provides dynamic resistance at 1.0430, rejecting buyers. At the same time, the 100 and 200 SMAs converge around 1.0800 with modest downward slopes. Finally, technical indicators have bounced from oversold levels, but have decelerated their advances within negative levels.

In the near term, and according to the 4-hour chart the bullish potential persists. EUR/USD holds well above a flat 20 SMA, while a mildly bearish 100 SMA provides dynamic resistance a handful of pips below the intraday high. Finally, technical indicators remain well above their midlines, with the Momentum still aiming north and the Relative Strength Index (RSI) indicator stable at around 58.

Support levels: 1.0370 1.0325 1.0280

Resistance levels: 1.0430 1.0475 1.0510