EUR Euro - Euro Testing Lows Amid Weakness, Entering Technical Oversold Territory

Data released on Friday showed that the Institute for Supply Management's Purchasing Managers' Index (PMI) unexpectedly rose by 0.9 to reach 49.3, the highest since March, edging closer to the expansion zone. A series of strong economic data raises doubts about the need for further rate cuts by the Federal Reserve in the near term, as this could potentially reignite inflation pressures. Richmond Federal Reserve Bank President Barkin stated that despite uncertainties surrounding trade and other policies that the incoming Trump administration may implement, the economic outlook for the U.S. in 2025 is positive. Markets will pay closer attention to a series of labor market data set to be released this week, with the December employment report on Friday being particularly significant.

The Euro faces weaker growth prospects and may be impacted by U.S. tariffs, with expectations that the European Central Bank will cut rates more than the Federal Reserve this year. Uncertainties such as the French budget battle and the German elections also add pressure on the Euro. In terms of technical trends, the RSI and stochastic indicators are in severe oversold territory, suggesting a potential slowdown in the Euro's decline. Immediate resistance is expected at 1.03, with the next key resistance at 1.0420/1.0440, serving as both a descending trend line and the 25-day moving average line. Breaking above this level could solidify the Euro's rebound trend, pointing towards 1.06 and potentially 1.0730. Support levels are anticipated at 1.0220 and 1.0160, with further support at the 1.00 mark.

Forecast range
Resistance: 1.0300 - 1.0420/1.0440 - 1.0600 - 1.0730
Support: 1.0220 - 1.0160 - 1.0000

Focus:
Monday:
Eurozone December Services, Composite PMI
Germany December CPI, HICP (21:00)
Tuesday:
Eurozone December HICP, Unemployment Rate (18:00)
Wednesday:
Germany November Retail Sales (15:00)
Eurozone December Economic Sentiment Index (18:00)
Eurozone January Consumer Confidence Index (23:00)
Thursday:
Eurozone November Retail Sales (18:00)

Any questions? contact our professional analysis team
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