EUR/USD Price Forecast: Cautious pressure amid looming Federal Reserve

EUR/USD Current price: 1.0496

• Looming central banks’ monetary policy decisions exacerbate a cautious mood.
• The preliminary estimate of the December European PMIs showed contraction continues.
• EUR/USD is neutral to bearish in the near term, support at 1.0460.

The EUR/USD pair is under mild pressure on Monday as demand for the US Dollar (USD) persists. The Greenback is finding support on firmer United States (US) Treasury yields, and mounting cautions amid looming major central banks’ decisions, including the Federal Reserve (Fed) scheduled for this Wednesday.

Data-wise, European figures were less encouraging than what the headlines suggest. According to the Hamburg Commercial Bank (HCOB) preliminary estimates for the December Purchasing Managers’ Index (PMI), “business activity fell for the sixth month running across Germany’s private sector in December, albeit with the rate of contraction losing some momentum thanks to a slight rebound in services activity.” The manufacturing index printed at 42.5, down from the previous 43, albeit services output bounced from 49.3 in November to 51. The Composite PMI ended at 47.8, slightly better than the previous 47.2. The Eurozone indexes were slightly better than anticipated, yet the EU Composite PMI resulted at 49.5, better than the previous 48.3, yet still indicating contraction.

The upcoming American session will bring the December NY Empire State Manufacturing Index and the preliminary estimates of the US December S&P Global PMIs.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows a mildly bearish 20 Simple Moving Average (SMA), which keeps providing intraday resistance, currently at 1.0520. The 100 and 200 SMAs, in the meantime, gain downward traction far above the shorter one, in line with the continued downward pressure. Finally, technical indicators lack directional strength. The Momentum indicator remains stuck to its 010 line, while the Relative Strength Index (RSI) indicator is flat at around 41, skewing the risk to the downside without confirming it.

The near-term picture is neutral-to-bearish. The pair met intraday sellers around a directionless 100 SMA and is currently battling a bearish 20 SMA below the longer one. At the same time, technical indicators head marginally lower within neutral levels, lacking enough strength to confirm another leg south. A break below 1.0460, a static support level, would favor a bearish extension towards the 1.0400/20 price zone.

Support levels: 1.0460 1.0410 1.0375

Resistance levels: 1.0520 1.0570 1.0625