EUR/USD Daily Forecast – Euro Eases Lower from Four-Month Highs

Euro Manufacturing PMI data Softens in December

The final reading of the Eurozone manufacturing PMI for December softened to 46.3 from 46.9 in the prior month. The figure was ahead of analysts’ expectations with the median forecast at 45.9.

Chris Williamson of Markit, the company that produces the data, commented that despite the recent optimism, there is still a long way to go for a return of growth. He added that new order inflows continue to fall at the largest pace in over seven years.

Manufacturing PMI data released today showed most major Eurozone economies beating analyst expectations although all but France remain in a contraction in this sector.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="EUR/USD was little moved on the data releases but fell rather sharply a minute before the European open.” data-reactid=”15″>EUR/USD was little moved on the data releases but fell rather sharply a minute before the European open.

The pair has shown strong upward momentum as of late and has gained roughly one and a quarter percent since the low last week. The exchange rate has benefited from a broadly weaker greenback as the trade-weighted dollar index (DXY) has declined to a fresh six-month low.

Technical Analysis

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Early day price action signals the potential of more downside for EUR/USD although the recent upward momentum cannot be ignored.” data-reactid=”18″>Early day price action signals the potential of more downside for EUR/USD although the recent upward momentum cannot be ignored.

A horizontal level at 1.1217 is an important one for the exchange rate. This level held the pair higher in November of 2018 and then lower in August last year. The upward momentum seems to be slowing in around the level over the past two sessions.

EURUSD 4-Hour Chart

The 1.1173 price point marks a major breakout point for EUR/USD. This level had held the pair lower from the middle of October until last week’s breakout. For this reason, buyers will likely try and defend this level on a dip over the near-term.

On a monthly chart, EUR/USD posted a bullish engulfing candle for December which stands to keep the pair bid overall. This signals upward potential although buyers might look for a steeper decline for value in their positioning.

Bottom Line

  • EUR/USD is showing signs of pulling back with major resistance at 1.1217 in play.
  • Support at 1.1173 is likely to hold buyers in the session ahead considering it has been a well-respected level since the middle of October.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article was originally posted on FX Empire” data-reactid=”37″>This article was originally posted on FX Empire

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