The EUR/USD currency pair experienced limited fluctuations in early trading, maintaining a price of approximately 1.1773 as the American session commenced. Despite the release of disappointing economic data from Europe, the Euro demonstrated resilience, particularly in light of recent trends indicating a weakening US Dollar.
European Economic Indicators Fail to Boost the Euro
Data from the Hamburg Commercial Bank revealed that the flash estimates of the December Purchasing Managers’ Index (PMI) showed a slowdown in business activity for the second consecutive month. The manufacturing index recorded a decline to 47.7, while the services index settled at 52.6, down from 48.2 and 53.1 respectively. This brought the overall Composite PMI down to 51.9, compared to 52.8 in November.
In a contrasting report, the ZEW Economic Sentiment for Germany showed a slight improvement, rising to 4.8 in December from –38.5 the previous month. However, the assessment of the current situation declined to –81 from –78.7. The EU’s Economic Sentiment also reported a notable increase, reaching 33.7, up from 25.0 in November.
US Employment Data Adds Pressure to Dollar
The EUR/USD pair’s upward movement was further influenced by the release of multiple US economic indicators. The ADP Employment Change report indicated that the private sector added an average of 16,250 new jobs in the week ending November 29, a significant increase from the previous week’s 4,750. Additionally, the US Nonfarm Payrolls report revealed that 64,000 new jobs were added in November, following a loss of 105,000 jobs in October. However, the unemployment rate rose to 4.6%, surpassing expectations and the previous rate of 4.4%.
Retail sales data for October showed no change, following a revised 0.1% increase in September. These figures contributed to a sense of uncertainty regarding the strength of the US economy, which in turn has exerted downward pressure on the US Dollar.
Technically, the EUR/USD pair reached a high of 1.1794 before retreating to the 1.1770 area, maintaining its intraday gains. The four-hour chart indicates a bullish trend, with the 20-period Simple Moving Average positioned above the 100 and 200 SMAs, all indicating upward slopes. This suggests a strong bullish momentum, with the 20 SMA providing dynamic support at 1.1744.
The Momentum indicator remains above its midline, signaling increasing buying pressure, while the Relative Strength Index (RSI) is trending upwards at approximately 69.2, supporting the bullish outlook. On the daily chart, the EUR/USD continues to trade above all moving averages, with the Momentum indicator stable above its midline and the RSI at 72, showing a positive trajectory.
As the market continues to react to economic conditions, traders will be watching closely for further developments that could influence the EUR/USD exchange rate in the coming days.
