The EUR/USD currency pair continues to face bearish momentum due to a combination of weak Eurozone economic data, China’s economic slowdown, and persistent U.S. Dollar strength.
In the Eurozone:
- German factory orders dropped 5.4% month-on-month, marking the steepest decline in three months, well below the forecasted 0.3% decrease.
- French consumer confidence fell unexpectedly, further emphasizing the region’s economic struggles.
China’s slowdown has also impacted the Eurozone, especially in the luxury goods sector, which relies heavily on Chinese demand. A weaker USD/CNY exchange rate and falling Chinese bond yields have exacerbated the pressure on Eurozone exports.
Tariff Speculation Bolsters Dollar
Speculation around U.S. tariffs has added to the dollar’s strength. Earlier reports suggested a potential softening of tariff policies, but President-elect Donald Trump reaffirmed a hard-line approach, introducing uncertainty into global trade dynamics.
This back-and-forth has heightened volatility in the EUR/USD pair. Traders are closely monitoring developments as the dollar remains susceptible to headline-driven movements.
U.S. Data Amplifies Dollar Strength
Positive U.S. economic data continues to bolster the greenback:
- JOLTS job openings reached 8.1 million in November, the highest since mid-2024, exceeding forecasts of 7.73 million.
- The ISM Services PMI rose to 54.1, surpassing estimates of 53.5 and signaling robust activity in the services sector.
- Despite a weaker-than-expected ADP payrolls report (122,000 vs. 139,000 expected), the overall U.S. labor market remains strong.
Rising U.S. Treasury yields further support the dollar, with the 10-Year yield hitting 4.73%, its highest level since April 2024. Expectations for Federal Reserve rate cuts have now shifted to July 2025, delaying anticipated monetary easing.
Technical Outlook: Continued Bearish Momentum
The EUR/USD remains locked in a downward trajectory, with technical indicators reinforcing the bearish sentiment:
- Both the 21-day and 200-day moving averages are sloping downward, and price action remains below these levels.
- Resistance lies in the 1.0460-1.0500 range, which must be reclaimed to reverse the bearish trend.
Key Support Levels to Watch
- Last week’s low: 1.0224
- Psychological levels: 1.0200 and 1.0100
Unless economic conditions improve in the Eurozone or the U.S. dollar weakens significantly, the path of least resistance for EUR/USD remains to the downside.