The EUR/USD currency pair began 2025 trading below the significant level of 1.0400. After concluding the previous year on a low note, the pair faces challenges in regaining momentum as it enters the new year. Despite the prevailing bearish sentiment in the market, an improved risk environment could potentially help the pair maintain its position and limit further declines.
Throughout the year-end period, the US Dollar (USD) thrived in a risk-averse atmosphere, putting downward pressure on the EUR/USD pair. However, as US stock index futures showed an uptick of 0.4% to 0.8% early on Thursday, optimism in the market might place additional pressure on the USD, potentially diminishing its dominance over the EURO .
Looking ahead, a key event on the US economic calendar include the weekly Initial Jobless Claims report, which is anticipated to show an increase in unemployment benefit applications, rising to 224,000 from the previous week’s 219,000. Should the reported figures exceed expectations, it could weaken the USD later in the trading session.
In the eurozone, the President of the European Central Bank, Christine Lagarde, has noted significant strides made throughout 2024 in combating inflation. She expressed hope that 2025 would align with the apex bank’s strategic goals for inflation targets, although her remarks elicited no immediate market reaction.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart indicates that bearish pressure persists, remaining below the neutral level of 50. The EUR/USD pair is trading beneath both the 20-period and the 50-period Simple Moving Averages (SMA), reinforcing its current bearish outlook. Key resistance levels on the upside include 1.0400, while support levels are identified at 1.0350, 1.0300, and 1.0250, suggesting traders should remain vigilant as the market navigates these critical levels.
