EUR/USD Price Forecast: King US Dollar battles to recover its crown

EUR/USD Current price: 1.1703

• German inflation shrank by more than anticipated in December, according to the HICP.
• S&P Global will publish the US Services and Composite Purchasing Managers’ Indexes.
• EUR/USD under pressure around 1.1700, bears aiming to push it further down.

The EUR/USD pair recovered some ground on Tuesday, but met sellers around the 1.1740 level. The pair lost momentum during European trading hours and heads into Wall Street’s opening trading around the 1.1700 mark.

On the data front, the Hamburg Commercial Bank (HCOB) released the final estimates of the December Services and Composite Purchasing Managers’ Indexes (PMIs) for the EU. “The euro area economy registered a twelfth successive month-on-month rise in private sector business activity at the end of the year,” according to the latest survey data, although the news was far from encouraging. The Composite PMI printed at 51.5, easing from the 52.8 posted in November. Services output also shrank to 52.4 from the previous 53.6, both indexes at three-month lows.

Additionally, Germany published the preliminary estimate of the December Harmonized Index of Consumer Prices (HICP), which rose 2% on a yearly basis, down from the 2.6% posted in November and below the 2.2% anticipated by market players. On a monthly basis, the HICP was up 0.2%, half the 0.4% expected.

Later today, S&P Global will release the final estimates of the United States (US) Services and Composite PMIs. Markets are likely to remain quiet ahead of the first batch of US employment data, as the ADP Employment Change survey and JOLTS Job Openings will be out on Wednesday.

EUR/USD short-term technical outlook

In the 4-hour chart, EUR/USD trades with a soft tone, struggling to retain the 1.1700 mark. The 20-period Simple Moving Average (SMA) slopes lower and stands above the price, while below the 100-SMA, reflecting increased bearish pressure. The 20-period SMA provides resistance at around 1.1723, while the 100-period SMA does the same at 1.1746. Meanwhile, the 200 SMA acts as support at 1.1673. The Momentum indicator ticks higher below its midline, while the Relative Strength Index (RSI) aims south at 42, keeping the risk skewed to the downside.

In the daily chart, EUR/USD retreated from a still bullish 20-day SMA at 1.1744, but remains above bullish 100- and 200-day SMAs at 1.1667 and 1.1560, respectively. Technical indicators diverge on directional strength but remain within negative levels, reflecting the ongoing weakness rather than confirming lower lows ahead. The weekly low at 1.1659 acts as psychological support as once below it, bears are likely to take control.

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