The EUR/USD pair is experiencing slight gains above the 1.0500 level as it begins the week on a positive note. After ending a five-day losing streak, the currency pair is maintaining its upward momentum with cautious optimism among traders. Investors are keenly anticipating the release of key macroeconomic indicators, including the Flash Purchasing Managers Index (PMI) for Germany, the Eurozone, and the United States.
Last week, the EUR/USD faced significant challenges due to a dovish stance from the European Central Bank and a robust performance from the US Dollar. These factors kept the pair under pressure, leading to a close in negative territory. Nevertheless, the improved market sentiment noted on Monday has allowed the pair to stabilize above the crucial 1.0500 level.
Attention is particularly focused on the preliminary December HCOB Manufacturing and Services PMI data from both Germany and the Eurozone. Should the Services PMI exceed the crucial threshold of 50, suggesting an expansion in economic activity, the EURO could see increased demand as a result.
Later in the day, market participants will also review the S&P Global PMI data from the US. A surprising drop in the Composite PMI below the 50 level could exert selling pressure on the US Dollar, influencing the EUR/USD pairing. However, many traders may choose to adopt a wait-and-see approach ahead of the Federal Reserve’s monetary policy updates scheduled for Wednesday.
From a technical perspective, the EUR/USD has shown some resilience. The Relative Strength Index (RSI) indicates a shift in momentum, signaling possible seller indecision. Key resistance levels are identified at 1.0520, where strong technical indicators converge. If the pair can hold above this level, a move towards 1.0600 may become feasible. Conversely, support levels are present at 1.0440, 1.0400, and 1.0330, which could provide a safety net for the pair in the event of a downturn.
