EUR/USD Price Forecast: Sellers may pause ahead of the weekly close

EUR/USD Current price: 1.0255

• Uncertainty kept financial markets in risk-averse mode on Thursday.
• United States encouraging data further fueled the US Dollar strength.
• EUR/USD approached the 1.0200 threshold, still aiming for lower lows.

The EUR/USD pair fell to 1.0223, its lowest since November 2022, finally stabilizing in the 1.0250 region. The US Dollar (USD) strengthened particularly against high-yielding rivals as fear overtook financial markets in the aftermath of the New Year holiday.

Data-wise, the Hamburg Commercial Bank (HCOB) published the final estimates of the December Manufacturing Producer Manager’s Index (PMI) for the Eurozone, showing a modest downward revision to 45.1 from the previous estimate of 45.2. The official report highlighted “ another month of deteriorating manufacturing sector conditions across the Eurozone, stretching the current sequence of decline to two-and-a-half years.”

Across the pond, the US published MBA Mortgage Applications for the week ended December 27, which fell by 12.6% after losing 0.7% in the previous week. Initial Jobless Claims in the same period printed at 211K, beating the expected 222K. Finally, S&P Global upwardly revised the December Manufacturing PMI, which came in at 49.4, better than the previous estimate of 48.3.

Friday will bring the official US ISM Manufacturing PMI, foreseen stable at 48.4. A  better-than-anticipated reading should provide additional support to the USD despite near-term overbought conditions.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows it is poised to extend its slump after falling below a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around 1.0450. At the same time, the 100 and 200 SMAs gain downward traction around the 1.0800 mark, reflecting increasing selling interest. Finally, technical indicators maintain firmly bearish slopes near oversold readings, supporting another leg south in the upcoming sessions.

The 4-hour chart shows EUR/USD is oversold, anticipating receding selling interest yet far from suggesting an upcoming advance. The pair may well consolidate at the current region before another round of selling takes place. In the aforementioned chart, the pair develops below all its moving averages, while technical indicators have lost their bearish strength but remain within extreme levels.

 Support levels: 1.0220 1.0180 1.0135

Resistance levels: 1.0285 1.0320 1.0375