The EUR/USD exchange rate stabilized around the 1.0400 level after a session of volatility earlier in the week. In the near-term, the pair may struggle to establish a clear direction, with upcoming macroeconomic data on Thursday expected to play a crucial role in influencing its movement.
On Monday, the pair initially rose above 1.0450, reaching a peak not seen in over ten days. However, it could not sustain this upward momentum as trading activity slowed, particularly due to the holiday season. As a result, the EUR/USD remained relatively flat around the 1.0400 level.
Investor sentiment turned cautious, especially following bearish trends observed on Wall Street, which contributed to the US Dollar’s resilience against its counterparts later in the day. In the US housing market, pending home sales saw a notable increase of 2% in November, building on a 1.8% rise in October and exceeding expectations of a 0.7% increase.
The economic landscape for Tuesday appears quiet, with no significant data releases anticipated. Additionally, financial markets will observe a break on New Year’s Day. Attention will shift to Thursday when key indicators such as Initial Jobless Claims and Challenger Job Cuts data for December are scheduled for release, potentially impacting market sentiment and the currency pair.
From a technical standpoint, after experiencing a dip earlier, the Relative Strength Index (RSI) on the 4-hour chart demonstrated a recovery, moving back to 50, which indicates uncertainty among sellers. Resistance for the EUR/USD is first noted at 1.0440, followed by 1.0460 and the notable resistance zone of 1.0490 – 1.0500. Conversely, should the pair fall below the 1.0400 level and establish it as a resistance point, the next support levels to watch would be 1.0350 and 1.0300.
