EUR/USD Climbs to 1.0501 Amid Weaker Dollar, Tariff Fears, and Mixed Data
The EUR/USD currency pair has regained its footing, climbing to an intra-day high of $1.0501 while holding steady near the $1.0492 mark.
The move comes as the US Dollar Index (DXY) dropped to around 107.00 after peaking at a two-year high of 108.07 on Friday. The weakening dollar has provided relief for the euro, which has faced mounting challenges from mixed Eurozone data and global economic uncertainty.
Despite the recent recovery, concerns linger about the US political landscape. President-elect Donald Trump’s potential appointment of Scott Bessent as Treasury Secretary has fueled fears of tariff hikes that could spark a global trade war. This scenario would place additional strain on the Eurozone’s export-reliant economy, further pressuring the shared currency.
Eurozone Data Paints a Mixed Picture
Recent economic data from the Eurozone presents a complex narrative for the EUR/USD pair.
German IFO Survey: November’s Business Sentiment Index revealed a slight dip in business morale, reflecting growing economic headwinds. However, expectations for the next six months remained relatively steady, indicating cautious optimism.
Flash PMI Data: Both the services and manufacturing sectors continue to contract, with new orders declining for six consecutive months. This trend highlights persistent stagflationary pressures in the Eurozone.
ECB Commentary: European Central Bank Chief Economist Philip Lane offered a glimmer of hope, suggesting that inflation control could be achieved next year, potentially reducing the need for restrictive monetary policies beyond 2024.
These developments have kept the euro resilient, despite ongoing challenges. Traders are closely watching the ECB’s next moves for additional guidance on the euro’s trajectory.
EUR/USD Technical Outlook: Bearish Risks Persist
The EUR/USD pair is trading at $1.04778, down 0.61%, as broader risk-off sentiment bolsters the US dollar. Key technical indicators suggest that bearish risks remain for the euro.
Resistance Levels: Immediate resistance is at $1.04901, followed by significant barriers at $1.05625 and $1.06071. A sustained move above these levels could signal renewed bullish momentum.
Support Levels: Immediate support lies at $1.03854, with stronger levels at $1.03489. A break below $1.03854 could expose the pair to further declines, potentially testing $1.03400.
50 EMA: The 50-day Exponential Moving Average at $1.05197 reinforces the bearish structure, maintaining downward pressure on the pair.
Momentum: The RSI at 50 signals neutral momentum, leaving room for further movement in either direction.
Market Outlook and Key Takeaways
The EUR/USD’s near-term trajectory will depend on several factors, including US tariff developments, Eurozone economic data, and upcoming ECB decisions. While the weaker US dollar has provided short-term relief, mixed data from Europe and fears of global trade disruptions continue to weigh on the euro. Traders should monitor key levels closely, as a break below $1.03854 could open the door to deeper declines, while a move above $1.04901 might suggest stabilization.
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