- The EUR/USD weekly forecast remains tilted to the downside, as US data shows resilience and fading odds of a January rate cut by the Fed.
- Markets ignored the improved Eurozone data, maintaining the selling pressure.
- Technically, the EUR/USD price needs to overcome the 1.1680 hurdle to relieve the selling pressure.
The EUR/USD pair struggled throughout the week, losing approximately 0.7%. Although there were some positive data points from the Eurozone, the pair struggled to gain ground due to the US dollar’s strength as the job market remained stable and yields were steady.
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The US NFP report was the most significant event of the week. The headline job growth of 50,000 was disappointing, but the other details told a more balanced story. The unemployment rate dropped to 4.4%, and wage growth accelerated, which supports the idea that the underlying labor market remains stable. This combination helped to fade expectations of a quick change in Federal Reserve policy, keeping the dollar strong.
Earlier this week, US data sent mixed signals. Some housing indicators showed signs of slowing down, but consumer sentiment surprised, which helped keep risk appetite stable and prevent the dollar from falling sharply. Richmond Fed President Tom Barkin also sounded cautious, saying that job growth is slow but steady and that inflation progress is likely to stay sluggish. That message made it clear that rates will remain unchanged for now.
The markets mostly ignored data from the Eurozone. Retail sales increased 2.3% YoY and 0.2% MoM, which was significantly better than expected. The same happened with German industrial production. However, these positive developments could not benefit the euro, as traders were more concerned with the impact of policy changes than with reviewing past growth data. The euro didn’t have an apparent reason to stop declining, as the ECB’s guidance was still mostly neutral.
Next week’s outlook for EUR/USD remains cautious. Inflation signals and central bank communication are likely to have a significant effect on the markets.
EUR/USD Major Events Next Week:
- Sentix Investor Confidence
- ECB policymakers’ commentaries
- US CPI and PPI inflation
- US retail sales and weekly jobless claims
If US inflation remains high, the dollar could strengthen, pushing EUR/USD below the 1.1600 level. If inflation data comes in lower or the Fed shows more caution, the EUR/USD pair could stabilize. However, unless US data clearly disappoints, any recovery is likely to remain limited.
EUR/USD Weekly Technical Forecast: Bearish Below 1.1680
The daily chart for the EUR/USD indicates the pair staying under pressure, with prices trading below all major moving averages. The pair has pulled back from the late-December highs near 1.1800 and is now holding steady around 1.1630. The 20-, 50-, 100-, and 200-period MAs are stacked in a bearish manner, adding to the short-term negative bias.
Momentum indicators also show signs of weakness. The RSI is close to the oversold region below 35, indicating that bearish momentum remains strong. However, selling pressure could start to slow down near key support. Recent attempts to recover have been feeble, suggesting a limited demand for dips thus far.
From a structural perspective, the price is testing a clear demand zone between 1.1620 and 1.1600. If this area breaks clearly, it could lead to deeper losses. On the contrary, if it holds steady, the pair could start a corrective rebound.
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Key Support Levels:
Key Resistance Levels:
A move back above 1.1680 would be needed to ease immediate bearish pressure.
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