EUR/USD Price Forecast: Bears retain control below 1.1780-1.1770 confluence breakpoint

EUR/USD sticks to its bearish bias on Friday amid a broadly firmer US Dollar.
Traders eye flash PMIs for some impetus ahead of the US GDP and PCE data.
The technical setup favors bears and backs the case for further depreciation.

Haresh Menghani FXStreet

The EUR/USD pair remains on the back foot through the Asian session on Friday and currently trades just above mid-1.1700s, well within striking distance of a nearly one-month low set the previous day.

The incoming US macro data pointed to a remarkably resilient labor market. Adding to this, the January FOMC meeting Minutes and hawkish comments from Federal Reserve (Fed) officials forced investors to pare their bets for more aggressive policy easing. This, along with rising geopolitical tensions, assists the safe-haven US Dollar (USD) in preserving its recent strong gains to the highest level since January 23, which, in turn, continues to weigh on the EUR/USD pair.

Furthermore, reviving bets for an interest rate cut by the European Central Bank (ECB) undermines the shared currency and seems to exert additional pressure on the EUR/USD pair. Traders now look forward to the release of the flash PMIs from the Eurozone and the US for short-term opportunities. The focus, however, will remain glued to the Advance US Q4 GDP report and the US Personal Consumption Expenditure (PCE) Price Index for a fresh directional impetus.

From a technical perspective, the EUR/USD pair now seems to have found acceptance below the 1.1780-1.1770 confluence and seems vulnerable to slide further. The said area comprises the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 61.8% Fibonacci retracement level of a strong move up from the January swing low. This should act as a key pivotal point and keep a lid on any attempted recovery amid the underlying USD bullish tone.

Meanwhile, the Moving Average Convergence Divergence (MACD) line stays below the Signal line and under the zero mark, with a narrowing negative histogram that suggests easing downside momentum. The Relative Strength Index (RSI) stands at 29 (oversold). The short-term bias remains fragile, though an oversold RSI and stabilizing MACD would favor a corrective bounce if momentum improves. A recovery could target the 50% retracement at 1.1828.

Furthermore, acceptance above the latter would brighten the tone, while failure to reclaim it would leave sellers in control of the pullback.

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

EUR/USD 4-hour chart

Economic Indicator

HCOB Composite PMI

The Composite Purchasing Managers’ Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging private-business activity in the Eurozone for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the private economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for EUR.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.