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EUR/USD Price Forecast: Trump keeps boosting the US Dollar

EUR/USD Current price: 1.0298

  • Worse-than-anticipated German and Eurozone figures undermined demand for the Euro.
  • The US ADP report showed the private sector added 122,000 new positions in December.
  • EUR/USD struggles around 1.0300 and aims to extend its slide in the near term.

The EUR/USD pair came under strong selling pressure early on Wednesday, bottoming ahead of Wall Street’s opening at 1.0272. The US Dollar (USD) benefited during Asian trading hours from a souring mood, exacerbated by caution ahead of key United States (US) data.

Tepid European data added to EUR/USD slide, as Germany reported that Factory Orders fell by 5.4% on a monthly basis in November, also down by 1.7% compared to a year earlier. Furthermore, Retail Sales in the same month were down 0.6%, below the 0.5% advance anticipated. Meanwhile, the Eurozone reported that Consumer Confidence held at -14.5 in December, while the Producer Price Index (PPI) rose by more than anticipated in November. The PPI was up 1.6% in the month, while the annual reading came in at -1.2%, higher than the previous -3.3%.

The pair accelerated south ahead of US data releases, on headlines indicating President-elect Donald Trump is considering declaring a national economic emergency that would allow him to create a widespread tariffs program.

While the EUR/USD pair held near the aforementioned low, the US published the ADP Employment Report, which showed that the private sector added 122K new jobs in December, missing expectations of 140K. Additionally, Initial Jobless Claims for the week ended January 3 increased by 201K, better than the 218K expected and below the previous 211K. The figures, however, had no actual impact on EUR/USD.

Later in the American session, the Federal Open Market Committee (FOMC) will release the Minutes of the December meeting.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair daily chart shows it remains below 1.0300 with an increased bearish potential after being rejected two days in a row by sellers aligned around a bearish 20 Simple Moving Average (SMA), currently at 1.0405. At the same time, the 100 SMA grinds south a mildly bearish 200 SMA in the 1.0800 region, reflecting bears’ strength. Finally, technical indicators accelerated lower within negative levels, favoring lower lows ahead.

The near-term picture is also bearish, as EUR/USD extends its slide below all its moving averages. The 20 SMA has lost its bullish strength below bearish longer ones, reflecting the prevalent downward pressure. Meanwhile, technical indicators maintain their downward slopes with uneven strength, still in line with another leg south.

Support levels: 1.0275 1.0230 1.0190

Resistance levels: 1.0405 1.0440 1.0485

(This story was corrected on Wednesday 8 at 14:08 GMT to say that German Factory Orders fell by 5.4% on a monthly basis in November and by 1.7% compared to a year earlier)

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Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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