EUR/USD Price Forecast: Speculative interest pause ahead of NFP

EUR/USD Current price: 1.0301

• FOMC Meeting Minutes showed officials believe upside risk to inflation increased.
• Eurozone Retail Sales posted a modest 0.1% advance in November, missing expectations.
• EUR/USD consolidates at around 1.0300, but the risk remains skewed to the downside.

The EUR/USD pair trades at around 1.0300, little changed on a daily basis while confined to a tight intraday range. Still, the US Dollar (USD) retains its overall bullish stance, posting modest advances against most major rivals.

The United States (US) Federal Open Market Committee (FOMC) published the Minutes of the December Federal Reserve (Fed) monetary policy meeting on Wednesday, putting mild pressure on the Greenback, as the document brought some negative headlines. The Minutes showed almost all members judged that the upside risk to inflation has increased. Even further, officials mentioned “potential changes in trade, immigration, fiscal, and regulatory policies” as the reasons behind their growth and inflation-related concerns.

At the end of the day, financial markets are more attentive to headlines related to President-elect Donald Trump than to macroeconomic data.

Data-wise, Germany released November Industrial Production, which rose 1.5% in the month while falling 2.8% from a year earlier. The Eurozone, in the meantime, reported that Retail Sales were up a modest 0.1% in November, missing expectations of a 0.4% gain.

Major US exchanges will fully close today, observing a National Day of Mourning. The bond market will operate on a shortened schedule, closing early at 2:00 PM Eastern Time (ET) rather than its usual 4:00 PM ET close.

The focus now shifts to the US Nonfarm Payrolls (NFP) report, scheduled for release on Friday. Investors have paused, hoping US employment data will provide more clues about what may happen to the USD next.

EUR/USD short-term technical outlook

The EUR/USD pair is down for a third consecutive day, and additional slides are likely in the upcoming sessions. The daily chart shows the pair keeps developing below a firmly bearish 20 Simple Moving Average (SMA), currently at around 1.0395. The 100 SMA, in the meantime, extends its slide below the 200 SMA in the 1.0800 region. Finally, technical indicators remain within negative levels, albeit with uneven strength, reflecting the lack of momentum.

Technical readings in the 4-hour chart support another leg lower, with EUR/USD developing below all its moving averages. The 20 SMA turned flat at around 1.0350, providing immediate resistance. Finally, technical indicators slowly gain downward traction after a period of consolidation within neutral levels, in line with another slide towards the weekly low at 1.0275.

Support levels: 1.0275 1.0230 1.0190

Resistance levels: 1.0350 1.0395 1.0440