The EUR/USD exchange rate experienced a slight decline of around 0.1% on Wednesday as the market continues to navigate a period of reduced activity due to a lack of significant data releases. After a pause in the typical trade war discussions, the market is left searching for direction, as recent comments and threats regarding import tariffs by US President Donald Trump have ceased.
As the market heads into Thursday, it faces another day with minimal data and context. The Federal Reserve is currently in its blackout period prior to its rate decision next week. In contrast, the European Central Bank is not bound by such restrictions, yet there seems to be limited commentary from policymakers that would meaningfully influence market outlooks. The appearance of ECB President Christine Lagarde on Wednesday drew little attention, highlighting the overall quietude surrounding central bank communications.
Attention will soon shift toward the upcoming Purchasing Managers Index (PMI) reports set for release on Friday from both the European Union and the United States. Expectations indicate a possibility of mixed results from the January surveys, with the services sector in the EU anticipated to remain flat, while a slight recovery in manufacturing figures may emerge. While PMI numbers typically have a muted impact unless they significantly deviate from forecasts, the lower response rates from survey participants may lead to skepticism about the overall findings.
From a technical standpoint, recent bullish attempts by EUR/USD traders fizzled out near the 50-day Exponential Moving Average at around 1.0460, falling short of significant resistance at the 1.0450 marker and retreating back towards the 1.0400 range. Despite some indicators suggesting oversold conditions, ongoing momentum appears limited. Traders anticipating a longer-term bullish correction should be patient, waiting for a confirmatory pattern of higher lows before making definitive moves.
