EURUSD Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.13% | -13.9 Pips |  |
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| Week to-date | -1.4% | -147.2 Pips |  |
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| December | -1.9% | -200.2 Pips | |
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Upcoming key events (London Time)
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)
What happened lately
In the United States, multiple economic indicators reflect a mixed outlook. The U.S. Manufacturing Business Outlook for December significantly dropped to -16.4 points from -5.5 in November, indicating weakening in the sector, as reported by the Philadelphia Fed. Meanwhile, the GDP growth for Q3 saw an increase to 3.1% from 2.8% in Q2, according to the Bureau of Economic Analysis. Personal Consumption Expenditure (PCE), excluding food and energy, rose slightly to 2.2% in Q3 from 2.1% in Q2. The GDP Price Index remained steady at 1.9% for Q3, unchanged from Q2. Initial Unemployment Insurance Claims were down, reaching 220,000 from the previous figure of 242,000 for the week ending 14 December, a positive indicator from the Department of Labor. Housing starts in November decreased to 1.289 million from October’s revised figure of 1.312 million, while building permits increased to 1.505 million from a revised 1.419 million in October, according to the Census Bureau. The Federal Reserve’s recent interest rate decision brought the Federal Funds Rate down to 4.5%, signaling a more cautious approach moving forward.
In Germany, consumer confidence as measured by the GfK Consumer Confidence Survey saw an improvement, with the January figure reaching -21.3 points from a revised -23.1 in December, offering a glimmer of recovery and optimism.
The Euro Area’s economic data showed a stagnant Harmonized Index of Consumer Prices (HICP) for November, unchanged at -0.3% from October, reported by Eurostat. The Core HICP decreased slightly to 2.7% from 2.8% in October, while the overall Core Harmonized Index remained at -0.6%, indicating persistent deflationary pressures.
The recent economic data suggests a complex economic environment for the EURUSD pair. The improvement in certain U.S. economic indicators, such as the GDP growth and reduction in unemployment claims, combined with a cautious easing in interest rates, may initially lend some support to the U.S. dollar. However, with economic sectors like manufacturing showing significant deterioration and the Fed’s cautious stance on future cuts, there could be potential downside pressure. In contrast, the Euro Area’s inflation data remains weak with deflationary undertones, which might contribute to subdued Euro strength. As a result, the EURUSD exchange rate reflects this duality, being currently in consolidation. Any upcoming changes in significant economic indicators, such as the U.S. PCE Price Index, could offer further insights and market movements.
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What can we expect from EURUSD today?
EURUSD on Thursday dropped -0.13% to 1.03628. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.03335 (S1).
Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.04224 or trades above daily pivot 1.0378. Break above could target R1 at 1.04072. While to the downside, we are looking at 1.03335 (S1) and daily low of 1.03487 as support levels. EURUSD need to break on either side to indicate a short-term bias. A close below 1.03487 would indicate selling pressure.
For the week to-date, take note that EURUSD is bearish as the pair posted lower by -1.4%.
Key levels to watch out:
| R3 | 1.04809 |
| R2 | 1.04517 |
| R1 | 1.04072 |
| Daily Pivot | 1.0378 |
| S1 | 1.03335 |
| S2 | 1.03043 |
| S3 | 1.02598 |
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