The EUR/USD exchange rate is currently trading in a narrow range near 1.0550 after finishing the previous week almost unchanged. Investors appear to be adopting a cautious stance in anticipation of the upcoming European Central Bank (ECB) meeting, resulting in a lack of decisive direction in the near-term technical outlook.
The pair experienced a brief rally last Friday, reaching its highest point since mid-November, surpassing 1.0600. However, it struggled to maintain this momentum and closed the week at approximately 1.0550. The resilient performance of the US Dollar, bolstered by robust labor market statistics for November, has made it challenging for EUR/USD to sustain its gains.
According to the US Bureau of Labor Statistics, Nonfarm Payrolls (NFP) increased by 227,000 in November, a significant improvement from the previously revised 36,000 increase in October, and well above market forecasts of 200,000. Conversely, the Unemployment Rate ticked up to 4.2% from 4.1%. Additionally, annual wage inflation, reflected in the Average Hourly Earnings, remained steady at 4%, exceeding the anticipated 3.9%.
Investors will be monitoring the economic calendar closely, although little high-impact data is expected to influence EUR/USD early in the week. The focus will shift to the November Consumer Price Index (CPI) data, which is likely to elicit a strong market reaction later in the week. Furthermore, the ECB’s policy decisions will be announced on Thursday, marking the last meeting of the year.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart hovers just above 50, indicating a potential standoff between buyers and sellers. Key resistance levels are situated at 1.0600, followed by the 200-period Simple Moving Average and various Fibonacci retracement levels, while support can be found in the 1.0520-1.0530 range, at the psychological 1.0500 level, and further down at 1.0440.
