The EUR/USD currency pair displayed a soft tone on Wednesday, remaining confined to a narrow range around the key level of 1.1700. Market participants exercised caution as they awaited significant economic data from the United States. As of now, the pair is trading at 1.1683, reflecting a modest selling pressure yet remaining stable within familiar boundaries.
During the London trading hours, the Eurozone released the preliminary estimate of the December Harmonized Index of Consumer Prices (HICP), which indicated a year-on-year increase of 2%, aligning with expectations. Month-on-month, inflation, as measured by the HICP, rose by 0.2% after a 0.2% decline in November. Despite this inflation data, the Euro showed little movement.
Across the Atlantic, the United States published its ADP Employment Change report, revealing that the private sector added 41,000 new jobs in December. This figure fell short of the anticipated 47,000, yet marked an improvement from the previous month’s loss of 32,000. Other noteworthy releases expected from the US include the October Factory Orders, the December ISM Services Purchasing Managers’ Index, and the November JOLTS Job Openings.
Technical Outlook for EUR/USD
From a technical perspective, the risk for the EUR/USD pair appears skewed to the downside. Analysis of the four-hour chart indicates that the pair is trading below a bearish 20-period Simple Moving Average (SMA), which is declining and positioned beneath the 100 SMA. Resistance levels are identified at 1.1705 and 1.1743, while the pair is currently holding just above a bullish 200 SMA at 1.1677.
In the daily chart, the EUR/USD trades below the 20-day SMA at 1.1743 and above the 100-day SMA at 1.1667, with these moving averages effectively containing price action. The 200-day SMA maintains a strong bullish slope below the current price, supporting a mid-term bullish view. However, the momentum indicator has turned negative, suggesting a decline in upward strength, while the Relative Strength Index (RSI) remains flat at 44, reflecting an overall negative sentiment.
Market sentiment remains cautious as traders prepare for the forthcoming US data, which could significantly influence the direction of the EUR/USD currency pair. As traders continue to evaluate the implications of these economic indicators, the currency pair’s ability to break through key resistance levels will be crucial in determining its near-term trajectory.
