EUR/USD Price Forecast: US data adding to US Dollar weakness

EUR/USD Current price: 1.1773

• EU flash December PMIs showed business activity slows for a second consecutive month.
• The US Nonfarm Payrolls report showed the country added 64K new jobs in November.
• EUR/USD flirted with 1.1800 before retreating, maintaining its bullish bias.

The EUR/USD pair traded in a well-limited range throughout the first part of the day, holding on to its December gains and changing hands at around 1.1760 early in the American session. The Euro (EUR) held on to higher ground, despite discouraging European data.

The Hamburg Commercial Bank (HCOB) released the flash estimates of the December Purchasing Managers’ Index (PMI), which missed expectations and worsened from November readings.

“Business activity growth slowed for the second month in a row across the German private sector in December,” according to the survey, which showed the manufacturing index at 47.7 and the services one at 52.6, easing from 48.2 and 53.1, respectively.  EU manufacturing output printed at 49.2, down from 49.6 in November, while the Services PMI printed at 52.6, leaving the Composite PMI at 51.9, below the previous 52.8.

Other than that, Germany released the ZEW Economic Sentiment survey, which improved to 4.8 in December from 38.5 in the previous month. The assessment of the current situation, however, deteriorated to -81 from -78.7. Finally, the report showed Economic Sentiment in the EU surged to 33.7 from 25.0 in November.

The pair extended its advance after the release of multiple US data figures. The ADP Employment Change 4-week survey showed that the private sector added an average of 16.25K new positions in the week ending November 29, up from 4.75 K the previous week. Then, the Nonfarm Payrolls (NFP) report showed that the country added 64K in November, after losing 105 in October. The Unemployment Rate jumped to 4.6%, worse than the expected and the previous 4.4%.

Finally, the US also published October Retail Sales, which remained unchanged in the month, following a revised 0.1% gain in September.

 EUR/USD short-term technical outlook

The EUR/USD pair peaked at 1.1794 before retreating, trading in the 1.1770 area and holding on to intraday gains. In the 4-hour chart, the 20-period Simple Moving Average (SMA) rises above the 100 and 200 SMAs, with all slopes pointing higher, underscoring a firm bullish bias. Price holds above these averages; the 20 SMA at 1.1744 offering nearby dynamic support. At the same time, the Momentum indicator advances above its midline, reflecting strengthening buying pressure. The Relative Strength Index (RSI) indicator also heads north at around 69.2, in line with the dominant bullish trend.

In the daily chart, EUR/USD develops above all its moving averages, while the Momentum indicator is stable above its midline. The RSI indicator, in the meantime, stands at 72, but is maintaining its upward slope. The 100-day SMA at 1.1647 provides support ahead of a bullish 20-day SMA at 1.1630.

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