Daily Technical Analysis EUR/USD: Continued Downward Trajectory

The EUR/USD pair continued its decline on Tuesday, struggling against the 1.0500 level, as momentum for an upward push toward 1.0600 seems to be fading. While several EU-focused data releases are scheduled for today, most investors remain fixated on the upcoming U.S. Non-Farm Payrolls (NFP) employment data, due later this week.

Erosion of Investor Confidence in the Euro

Investor confidence in the euro has been undermined by recent political developments in France and Germany. French Finance Minister Bruno Le Maire recently declared that the government will not accept forced deadlines for the Rassemblement Nationale’s budget. The Rassemblement Nationale, a key opposition party, is crucial for Prime Minister Michel Barnier to pass his budget.

The resulting political impasse is contributing to euro weakness. Analysts see a motion of censure against Barnier’s government as increasingly likely, potentially triggering a spike in French government debt and further eroding confidence in the euro.

Euro Faces Continued Downward Pressure

Political and economic uncertainties in Europe are reflected in the EUR/USD’s performance, with the pair showing further downward momentum on the charts. Additional declines are expected for this highly traded currency pair.

• Final November Purchasing Managers’ Index (PMI) results from the European Union are due today but are not expected to show any significant changes.
• ECB President Christine Lagarde will speak to the European Parliament’s Economic and Monetary Affairs Committee. However, no major policy announcements or market-moving comments are anticipated.

U.S. Data and Dollar Strength

On the U.S. side, key economic indicators and events are expected to impact market sentiment:

1. ADP Non-Farm Employment Change: Expected to decline to 150,000, down from 233,000 in the previous reading.
2. US ISM Services PMI: Forecasted to decrease to 55.5 in November from 56.0 in October.
3. Federal Reserve Chairman Jerome Powell: Powell is scheduled to participate in a moderated discussion hosted by the New York Times and will take audience questions.

Meanwhile, the U.S. dollar continues to strengthen, as demand for the greenback as a safe haven rises. This comes after President-elect Donald Trump’s statement about imposing 100% tariffs on BRICS countries attempting to create a BRICS currency to move away from the U.S. dollar.

EUR/USD Daily Technical Analysis for December 4th

The EUR/USD pair remains near the 1.0500 level, with its earlier bullish recovery losing steam. While the U.S. dollar shows resilience, the euro struggles amid ongoing European political and economic uncertainties.

• The pair recently touched multi-year lows near 1.0330, but the US dollar has managed to produce a green weekly candle, signaling relative strength.
• A bearish crossover between the 50-day and 200-day exponential moving averages (EMAs) adds to the downward outlook:
  • The 50-day EMA is dropping toward 1.0700.
  • The 200-day EMA indicates resistance near 1.0840.

This technical setup underscores the EUR/USD’s continued vulnerability, with no immediate signs of a sustained recovery.