The EUR/USD currency pair displayed a soft tone on Wednesday, hovering around the critical level of 1.1700. Financial markets appeared to pause in anticipation of significant economic data from the United States, reflecting a climate of cautious optimism. As of the latest trading session, the pair stood at 1.1683.
During the European trading hours, the Eurozone released its preliminary estimate of the December Harmonized Index of Consumer Prices (HICP), which indicated an annual increase of 2%, aligning with market expectations. Month-on-month, inflation measured by the HICP rose by 0.2%, reversing the previous month’s decline of 0.2%. Despite this data, the Euro did not react significantly, maintaining its position within familiar trading levels.
Across the Atlantic, the United States published the ADP Employment Change report, revealing that the private sector added 41,000 jobs in December. This figure fell short of the anticipated 47,000 but marked an improvement from the previous month’s loss of 32,000. The US economic calendar is set to release additional important figures, including October Factory Orders and the December ISM Services Purchasing Managers’ Index.
Technical Outlook for EUR/USD
From a technical perspective, the outlook for the EUR/USD pair appears risk-averse, skewed to the downside. The four-hour chart indicates that the pair is trading below a bearish 20-period Simple Moving Average (SMA), which is situated beneath the 100-period SMA. This setup indicates resistance at 1.1705 and 1.1743. Meanwhile, the pair is barely holding above a bullish 200-period SMA at 1.1677.
In the daily chart, the EUR/USD is trading below the 20-day SMA at 1.1743 but remains above the 100-day SMA at 1.1667, suggesting that these moving averages are containing price action. The 200-day SMA maintains a strong bullish slope well below the current price, contributing to a mid-term bullish alignment. However, the Momentum indicator has turned negative, indicating a reduction in upside strength, while the Relative Strength Index (RSI) remains flat at 44, consistent with the overall negative sentiment.
As traders continue to digest the latest data, the EUR/USD pair may experience fluctuations, particularly as the market awaits further economic indicators from the United States.
