- EUR/USD inches up with the pair navigating close to the 200-day moving average.
- German GDP contracts in Q4 2023, while Ifo business climate index shows slight improvement.
- Fed officials maintain cautious stance on rate cuts, despite solid US economic indicators.
The Euro prints gains against the US Dollar during Friday's North American session but still circa the 200-day moving average (DMA) at 1.0826, amid an absent economic calendar in the United States (US). Data from the Euro area (EU) witnessed its largest economy shrinking while business sentiment improved. The EUR/USD trades at 1.0827, up a minuscule 0.04%.
EUR/USD hovers around 200-DMA as German economy contracts and business sentiment slightly improves
Data from the EU revealed that the German economy contracted -0.3% as expected on a quarterly basis in Q4 2023, according to Destatis. Annually based, the Gross Domestic Product (GDP) shrank -0.2%. Further data revealed that the business climate in Germany slightly improved from 85.2 to 85.5, according to the Ifo Institute.
Across the pond, the US economic calendar is absent though the latest unemployment claims figures and solid S&P Global Flash PMIs justified Fed officials’ hawkish commentary. Policymakers stated they’re ready to ease policy but not in a rush, as recent economic data solidifies that the economy is strong, which could reignite inflationary pressures.
The CME FedWatch Tool depicted traders aligning with the latest Fed projections, with officials estimating three rate cuts, as revealed by the latest Summary of Economic Projections (SEP) in December 2023. As of writing, traders have priced in 81 basis points (bps) of easing toward the end of 2024.
EUR/USD Price Analysis: Technical outlook
The EUR/USD is neutral to bearish bias, as the upward move toward the 50-day moving average (DMA) at 1.0885 was quickly rejected, with bears remaining in charge. If they push prices below the 1.0800 figure could exacerbate another leg down, targeting the November 10 low of 1.0656. But first, they must reclaim the 1.0750 area, followed by the 1.0700 mark. On the bullish side, the pair must reclaim the 200-DMA before buyers lift the exchange rate towards the 50-DMA ahead of 1.0900.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.