Technical Analysis

EUR/USD Price Analysis – Jan 05, 2024

By LonghornFX Technical Analysis
Jan 5, 20243 min

Daily Price Outlook 

The EUR/USD currency pair extended its upward trend, gaining positive traction for the second consecutive day on Friday. It is currently hovering above the mid-1.0900s as traders are eagerly anticipating crucial macro data from both the Eurozone and the United States (US) for significant impetus. However, the market sentiment remains optimistic as investors closely monitor economic indicators for potential market-moving cues.

Eurozone Inflation Data and US Nonfarm Payrolls Impact EUR/USD Pair

It's important to mention that the Eurozone will release its flash inflation figures, followed by the crucial US Nonfarm Payrolls (NFP) later in the North American session. These data points will heavily impact market expectations for the European Central Bank (ECB) and the Federal Reserve (Fed) policies, influencing the short-term direction of the EUR/USD pair.

In the meantime, the Euro got a boost after unexpectedly positive revisions of Eurozone PMIs on Thursday, causing investors to dial back expectations for aggressive ECB rate cuts. Currently, there's about 156 basis points of expected easing from the ECB this year, slightly less than Wednesday's 166 bps. This, coupled with a subdued US Dollar, is helping the EUR/USD pair.

Factors Supporting Stability in the US Dollar Amid Reduced Rate Cut Expectations and Cautious Market Sentiment

Moreover, the US Dollar's downside is limited due to fewer expectations for the Federal Reserve to quickly slash interest rates in 2024. This sentiment strengthened after a positive US labor market report on Thursday. Consequently, US Treasury bond yields are holding firm. Besides, the current cautious market sentiment, leaning towards safer assets, might keep the US Dollar in a stable position, as it's often seen as a safe-haven.

  EUR/USD Price Chart - Source: Tradingview
  EUR/USD Price Chart - Source: Tradingview

EUR/USD - Technical Analysis

On January 5th, the EUR/USD pair exhibits cautious trading, slightly down by 0.09% at 1.09353. This movement reflects a delicate balance in market sentiment. The current pivot point at 1.07951 is crucial for future trends, with immediate resistance levels at 1.09636, 1.12086, and 1.13821, presenting possible upward barriers. Support levels at 1.05501, 1.03766, and 1.02081 are key to preventing further declines.

The RSI at 51 suggests a neutral to slightly bullish sentiment. The MACD value of -0.00190, below its signal line, indicates potential bearish momentum. The pair's position relative to the 50-Day EMA at 1.08717 suggests a balanced trend.

No specific chart patterns are currently observed, implying market uncertainty. The overall trend for EUR/USD remains neutral with a short-term bearish inclination. A trading strategy involving a sell below 1.09436, targeting profits at 1.08932 with a stop loss at 1.09833, may be appropriate under current conditions.

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