EURUSD Fails to Hold Above at 1.06 After Weak German Data
EUR/USD made a bullish move yesterday on the back of the USD pullback, however, it stalled below 1.06 once again as the Eurozone economy continues to show weakness.
The EUR/USD has experienced a significant decline over the past two months, losing nearly 10 cents, driven by weak eurozone data and dovish expectations from the European Central Bank (ECB). The pair has recently found support at 1.0331, with price action stabilizing within a range over the past two weeks. This stabilization reflects a temporary pause in the bearish trend, although the general sentiment remains negative due to ongoing economic struggles in the eurozone and political uncertainties in France.
Recent economic data, including the manufacturing and services PMIs, has shown a notable contraction in the eurozone economy. These figures add to concerns about the region’s economic outlook and have kept pressure on the Euro. Political tensions in France further exacerbate these worries, reinforcing a cautious market sentiment.
EUR/USD Chart Daily – The 20 SMA Acted As Resistance
Despite these challenges, the EUR/USD saw a modest recovery this week, largely attributed to weak U.S. economic data. Initial unemployment claims came in higher than expected, signaling potential softness in the U.S. labor market and prompting selling pressure on the USD. On Thursday, buyers leveraged this USD weakness and the support provided by the 100- and 200-hour moving averages to push the EUR/USD higher ahead of the crucial U.S. jobs report on Friday.
The upcoming Non-Farm Payrolls (NFP) report is a key event that could either support or contradict the narrative of a cooling U.S. labor market. The data will likely determine whether the EUR/USD can sustain its recent upward momentum or revert to its bearish trajectory. For now, the pair’s direction remains tied to the interplay between eurozone challenges and U.S. economic developments. Without significant improvements in eurozone economic conditions or further weakness in the USD, the broader bearish trend for EUR/USD is expected to persist.
Eurozone Q3 Final GDP Report
- Quarter-on-Quarter Growth:
- Final GDP growth confirmed at +0.4%, in line with the second estimate.
- Previous quarter’s growth rate: +0.2%, reflecting a modest improvement in economic activity.
- Insight:
- While the data confirms growth in Q3, it underscores the limited momentum in the eurozone economy, which continues to face challenges such as high inflation, weak consumer confidence, and geopolitical uncertainties.
German Factory Orders and Industrial Production – November and October Data
- German Factory Orders:
- Data for November is awaited, with markets closely watching for signs of stabilization after recent contractions in industrial activity.
- October Industrial Production:
- Actual: -1.0% m/m
- Expected: +1.2% m/m
- Prior: Revised from -2.5% to -2.0%
- Insight:
- Industrial production continues to struggle, reflecting ongoing supply chain disruptions, high energy costs, and subdued demand in key sectors.
- The downward revision of prior data highlights deeper challenges in Germany’s manufacturing base, which is pivotal to the eurozone economy.
EUR/USD Live Chart
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