The EUR/USD currency pair is seeing a recovery towards the 1.0300 level during the European trading session on Friday, following a challenging start to the year. Despite the rebound, the outlook for EUR/USD remains bearish in the near term, with expectations centered around upcoming economic data.
On the first trading day of 2025, the pair faced significant downward pressure, plummeting to its lowest point in over two years at 1.0224. While a slight recovery has brought it back above 1.0300, technical indicators suggest that the bearish sentiment is likely to persist. This continued weakness has been largely driven by the strength of the U.S. dollar.
Recent labor statistics from the United States revealed a decrease in weekly Initial Jobless Claims, falling to 211,000 from 220,000 the previous week, outpacing market expectations. The positive labor data reinforced the dollar’s gains, further contributing to the pressure on the EUR/USD pair. Additionally, cautious market sentiment has added to the downward momentum.
Traders will be attentive to the forthcoming ISM Manufacturing Purchasing Managers Index (PMI) data for December, which is anticipated to reflect a continuation of the previous month’s reading at 48.4. Experts will also examine the inflation component, the Prices Paid Index, expected to increase from 50.3 to 51.7. A stronger-than-expected inflation figure could bolster the dollar, complicating the situation for the EURO . Conversely, a disappointingly low PMI could lead to a reversal in momentum for the currency pair.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart has shown improvement, moving above the 30 mark from a low of near-20, indicating that while a correction may have occurred, the overall bearish trend remains intact. Resistance levels are identified at 1.0300 and 1.0350, while support is noted at 1.0240 and eventually at 1.0200 and 1.0160.
