The EUR/USD trades at the edge of 1.0290, weakened by prospects for gentle rate cuts by the ECB and the strength of the US Dollar that is further helped by mixed US economic reports and dovish messages from the Fed. However, interim resistance for the EUR/USD remains at 1.0354 and 1.0434 while key supports lie at 1.0176 and at parity at 1.0000, representing an ongoing downtrend below the 200-day SMA at 1.0779. The ECB continues to focus on growth in a rising inflationary environment, and the Fed will remain cautious with respect to adjustments in rates amid growing inflationary concerns and fiscal uncertainty. Fresh direction will be given by upcoming eurozone inflation and current account data, as EUR/USD remains in a difficult economic and geopolitical scenario.

KEY LOOKOUTS

• The Euro continues to see pressure due to the European Central Bank’s slow rate cuts; inflation dynamics persist, and even economic growth in the region comes under question.

• The mixed US economic figures, Fed policies, and rumors of trade tariff implications under an administration led by President-elect Donald Trump continue favoring the Dollar.

• Pivotal Support is at 1.0176, the resistance at 1.0354 and at 1.0434 and the bearish trend continues unabated below 200-day SMA at 1.0779.

• Eurozone inflation and current account figures for January 17 will be an important factor that will decide EUR/USD prices in the short-term.

EUR/USD continues its downward pressure, trading near the 1.0290 handle, weighed on by the market’s expectation for gradual ECB cuts, as the euro faces two contrasting monetary policies and a strength US Dollar. Technical levels indicate strong support at 1.0176 and parity at 1.0000, while resistance is seen at 1.0354 and 1.0434, and the overall bearish trend continues to hold below the 200-day SMA at 1.0779. Eurozone inflation and current account data on January 17 will be important in giving the pair a fresh push. Geopolitical and economic uncertainties related to US trade tariffs and cautious stances by both the Fed and ECB add weight to the downtrend of this pair.

EUR/USD fails to break above 1.0300 as it is pressured further by the ECB’s cautious approach to rate cut and strong dynamics of the US Dollar. EUR/USD pairs await eurozone inflation data to take fresh market cues. EUR/USD falls back to 1.0290, pressured further by monetary policy expectations and the stronger US Dollar.

• Expected gradual cuts from the European Central Bank pressure the euro.

• The Fed is conservative about easing and remains cautious with inflation, making the US Dollar more likely.

• Levels to watch: Support 1.0176 and parity 1.0000

• Resistance at 1.0354, 1.0434, and the 200-day SMA at 1.0779

• Eurozone inflation and current account figures for January 17 are major market sentiment gauges.

• Uncertainties regarding US trade tariffs also put a strain on the euro.

EUR/USD has stayed under pressure lately, trading at 1.0290 while contrasting monetary policies between the ECB and Fed have been bearing down on the euro. Gradual rate cuts anticipated by the ECB to stimulate growth in the economy have lowered the mood of investors, particularly given that inflation in the eurozone is moving closer to higher rates. Meanwhile, the US Dollar keeps on reaping the benefits of cautious Fed signals and mixed US economic data that include poor retail sales and dovish comments from FOMC officials that are fueling rate adjustment speculation as modest.

EUR/USD Daily Price Chart

Sources: TradeView, Prepared By ELLYANA

EUR/USD is currently holding at the support levels at 1.0176 and at parity 1.0000, whereas the resistance levels stand at 1.0354 and 1.0434, with the bigger bearish trend holding below the 200-day SMA at 1.0779. Traders are closely watching eurozone inflation and current account figures due on January 17, which could provide fresh direction. Adding to the uncertainty are geopolitical risks, such as the potential reintroduction of US trade tariffs under President-elect Donald Trump, which may further strengthen the Greenback and keep the euro under pressure in the near term.

TECHNICAL ANALYSIS

Currency majors – EUR/USD : Remains in a bearish trend while trading below the 200-day SMA at 1.0779. Downside levels of note include the YTD low at 1.0176, parity at 1.0000, with potentially further downsides to 0.9935 and 0.9730. Upwardly, immediate resistances stand at 1.0354 and 1.0434, with stronger resistances at 1.0506 (55-day SMA) and 1.0629 (peak into December). Momentum indicators mixed and giving a bearish bias since RSI near 41 can indicate range-bound activity, but ADX near 35 does support the uptick in bearish momentum, which will likely keep downside risks elevated for the pair.

FORECAST

EUR/USD maintains its supremacy for the short and medium term while the pair hovers below main resistance levels with the overall downward trend remaining unbroken below 200-day SMA at 1.0779. The near-term support could be seen in the form of 1.0176 as the YTD low, 1.0000 (parity level), and beyond at 0.9935 and 0.9730 if the sell pressure intensifies.

Short-term relief will come in if the pair manages to move above the near-term resistance level of 1.0354 and 1.0434. It will need a higher break above 1.0506, the 55-day SMA, and 1.0629, the December high, but this will also see substantial selling on those levels. Overall, it will depend largely on ECB and Fed policy announcements as well as upcoming eurozone inflation and US economic data for the pair’s direction.