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Home » Forex Technical Analysis » EUR/USD Hits New Low Amid Strong US Dollar Sentiment

EUR/USD Hits New Low Amid Strong US Dollar Sentiment

  • January 13, 2025
  • 39

The EUR/USD currency pair is experiencing significant downward pressure, trading at a new low of 1.0197, a level not seen since November 2022. The US Dollar is on the rise, driven by investor expectations that interest rates in the United States will remain unchanged for the foreseeable future. The latest employment data reinforced the impression of a robust labor market, leading many to believe that the Federal Reserve will maintain its current rate policies at least until mid-2025.

With the macroeconomic calendar largely absent of impactful data, market movements are primarily dictated by overall sentiment. Following the most recent Nonfarm Payrolls report, which indicated stability in employment but a decrease in wage inflation, stock markets reacted negatively, resulting in losses across both Asian and European exchanges. This risk-off sentiment contributed to the upward momentum of the US Dollar, which indicates a potential for continued gains.

In terms of technical analysis, the outlook for EUR/USD remains decidedly bearish. The pair has been declining for five consecutive days, significantly underperforming relative to its moving averages. The 20 Simple Moving Average is acting as a dynamic resistance point around 1.0370, while the longer-term 100 and 200 SMAs continue to suggest downward trending conditions. Current technical indicators suggest further potential for declines, with momentum firmly in negative territory and approaching oversold conditions.

Short-term forecasts indicate that while the EUR/USD is in extreme territory, overall sentiment leans heavily towards further weakness. The 4-hour chart highlights the pair’s position well below resistance levels, and the Relative Strength Index is currently consolidating close to a notably low reading of 24. Key support levels to watch include 1.0175, 1.0130, and 1.0095, while resistance is observed at 1.0245, 1.0280, and 1.0325.

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