The EUR/USD currency pair is struggling, with traders eagerly awaiting crucial US manufacturing data and insights from Fed speakers.
As of Thursday, the EUR/USD exchange rate hovers below 1.1640, currently at 1.1635, despite the Eurozone's impressive Industrial Production figures, which exceeded expectations. The Eurozone's industrial output grew by a steady 0.7% in November, surpassing the predicted 0.5% slowdown. Year-on-year, production growth accelerated to 2.5%, outpacing the market's 2% forecast.
But here's the catch: the Euro's recent gains are overshadowed by a persistent bearish trend since late December. This is largely due to a series of robust US macroeconomic data releases and diminishing concerns about the Fed's autonomy, which have bolstered the US Dollar's appeal.
On Wednesday, US data revealed a surprising surge in producer prices, with a 3% year-on-year increase, defying expectations of a slowdown. Retail sales also rebounded strongly in November, rising 0.6% after a 0.1% dip in October, beating market forecasts. These figures strengthen the Fed's case for maintaining interest rates in the coming months.
And this is the part most people miss: geopolitical tensions have eased, with President Trump's reassurance about the situation in Iran. This has led to a pullback in oil prices and safe-haven assets, which could indirectly impact the US Dollar's rally.
Investors are now eagerly awaiting the NY Empire State and Philadelphia Fed manufacturing reports, which will shed light on the US economic outlook for Q4 2025. These reports will set the stage for Fed policymakers' speeches later in the day.
The Euro's performance against other major currencies is mixed. The Euro gained the most against the Canadian Dollar, while the US Dollar saw modest gains against most peers, thanks to positive macroeconomic data and Fed-related developments.
A closer look at the technical analysis reveals that the EUR/USD is trading near 1.1635, with a downward trajectory from weekly highs near 1.1700. The MACD indicator on the 4-hour chart hovers around the zero line, indicating a neutral sentiment, while the RSI points downward at 38, suggesting growing bearish pressure. Bears are targeting the January 9 low of around 1.1615, with further support near the channel bottom at 1.1600 and the December 2 low at 1.1590. Resistance is expected at Wednesday's high of 1.1660, followed by the channel top at 1.1690 and the January 12 high near 1.1700.
So, will the US manufacturing data and Fed speakers provide the much-needed boost for the EUR/USD, or will the bearish trend prevail? Share your thoughts in the comments below!
