- EUR/USD is skinny and flat near the 1.0500 level amid a bullfight.
- Another Fed rate call and other key US data will keep Fiber focused on the US side this week.
- On Wednesday, the Fed expected to cut interest rates for the third time in a row.
EUR/USD turned slowly upward on Monday, drifting to the upper end of a short-term consolidation just north of the 1.0500 level, albeit with a noticeable lack of conviction. European data is relatively circumscribed this week, leaving fiber traders to face a huge data set on the US side of the picture.
Markets largely overlooked speeches by numerous European Central Bank (ECB) officials to start the novel week. December’s European PMI data exceeded expectations, but services PMI surveys continue to decline as concerns over the deepening economic slowdown in Europe continue to worry investors and businesses.
According to CME’s FedWatch Tool, markets are anticipating Wednesday’s Fed rate decision, with a 25-basis-point rate cut being 99.1% fully implemented. Traders will be paying close attention to the Fed’s revised Summary of Economic Projections (SEP) and policymakers’ forecasts for interest rates.
US PMI data for December paints a mixed picture, with the Services PMI hitting multi-year highs, while the Manufacturing PMI fell further below 50.0, indicating a decline. Retail sales data will be released on Tuesday but could attract market attention ahead of the Fed’s final decision on interest rates later this year.
EUR/USD price forecast
The EUR/USD daily chart reflects the overall downtrend as the pair continues to trade below both the 50-day EMA at 1.0659 and the 200-day EMA at 1.0810. Falling moving averages confirm continued selling pressure, with the euro unable to regain significant ground against the dollar. The MACD indicator remains subdued with its signal line hovering below zero, signaling penniless momentum and buyer caution.
The final candle shows modest bullish action as EUR/USD closed slightly higher at 1.0517, marking a minor rebound after several sessions of sideways movement. However, the pair is still unable to convincingly break above the resistance zone at 1.0550, suggesting circumscribed upside potential in the near future. If buyers gain traction, a retest of the 50-day EMA near 1.0660 could be anticipated. Conversely, failure to sustain this rebound could expose the pair to renewed selling pressure, with support at 1.0450 most likely to center. The overall sentiment remains bearish until a clear breakout above key resistance levels materializes.
