This week’s economic landscape is marked by key events across major economies, with a focus on inflation, employment, and consumer spending data from the U.S., UK, and Australia. Against this backdrop, EURUSD remains in a well-defined bearish trend, though technical indicators hint at a potential corrective move. Traders will closely monitor critical support and resistance levels while the latest strong U.S. jobs report continues to influence market sentiment, tempering expectations for immediate Fed rate cuts.
Overview
This week’s economic landscape is marked by key events across major economies, with a focus on inflation, employment, and consumer spending data from the U.S., UK, and Australia. Against this backdrop, EURUSD remains in a well-defined bearish trend, though technical indicators hint at a potential corrective move. Traders will closely monitor critical support and resistance levels while the latest strong U.S. jobs report continues to influence market sentiment, tempering expectations for immediate Fed rate cuts.
Key Economic Events
Tuesday 15:30 (GMT+2) - USA: PPI m/m (USD)
Wednesday 09:00 am (GMT+2) - UK: CPI y/y (GBP)
Wednesday 15:30 (GMT+2) - USA: CPI m/m (USD)
Thursday 02:30 am (GMT+2) - Australia: Employment Change (AUD)
Thursday 09:00 am (GMT+2) - UK: GDP m/m (GBP)
Thursday 15:30 (GMT+2) - USA: Retail Sales m/m (USD)
Thursday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+2) - UK: Retail Sales m/m (GBP)
Technical Analysis
Since reaching a high price of 1.12134 on September 25, the EURUSD pair experienced a bearish reversal known in technical analysis as a non-failure swing. Specifically, the peak at 1.12134 surpassed the previous peak, and subsequently, prices dropped below the trough of 1.10020. The price then followed a pattern of lower peaks and lower troughs, consistently remaining below the 50-period Exponential Moving Average for the last four months. The 50-period Exponential Moving Average (EMA), the Momentum oscillator, and the Relative Strength Index (RSI) all support the bearish outlook. Specifically, prices are below the 50-period EMA, the RSI values are below 50, and the Momentum oscillator registers values below the 100 baseline, indicating a decline. Upon closer examination, there is a positive divergence between the oscillators and the price, suggesting a potential upward correction.
Potential Upside Targets
If the bulls take control of the market, traders may consider the following four potential upside targets:
1.02972: The first resistance is seen at 1.02972, which corresponds to the weekly Pivot Point, PP, calculated using the standard methodology.
1.04578: The second price target is identified at 1.04578, representing the daily high from December 30 and the 50-period Exponential Moving Average.
1.06284: The third resistance level is established at 1.06284, representing the peak formed on December 6.
1.08192: An additional resistance is recognized at 1.08192, aligning with the 61.8% Fibonacci Retracement drawn from the high point, 1.12134, to the low point, 1.01772.
Potential Downside Targets
If the bears maintain control of the market, traders may find potential opportunities in the following four downside targets:
1.00920: The initial level of support is identified at 1.00920, corresponding to the 161.8% Fibonacci Extension drawn from the swing low, 1.02235, to the swing high, 1.04363.
0.99684: The second support level is observed at 0.99684, reflecting the monthly support, S3, estimated using the standard Pivot Points methodology.
0.98792: The third level of support is 0.98792, which corresponds to the 261.8% Fibonacci Extension drawn from the swing low of 1.02235 to the swing high, 1.04363.
0.95349: An additional support is seen at 0.95349, reflecting a 423.6% Fibonacci Extension drawn from the swing low of 1.02235 to the swing high, 1.04363.
Fundamentals
U.S. nonfarm payrolls rose by 256,000 in December, significantly exceeding the 155,000 forecast and up from 212,000 in November. The unemployment rate dipped to 4.1%, slightly better than expectations, while a broader measure of joblessness fell to 7.5%, the lowest since June 2024.
Wage growth remained moderate, with average hourly earnings up 0.3% for the month and 3.9% year-over-year, slightly below projections. Key sectors contributing to job growth included health care, leisure, hospitality, and retail.
The unexpectedly strong report led to a sharp decline in stock market futures and a spike in Treasury yields as traders revised their expectations, now seeing a lower chance of Fed rate cuts in 2025.
Conclusion
In conclusion, this week presents a critical juncture for traders, with key economic data poised to shape market sentiment and influence future policy expectations. While EURUSD maintains a bearish stance, technical signals of a potential correction warrant attention. Traders should remain vigilant, closely monitoring support and resistance levels as well as major economic releases to navigate the evolving market landscape effectively.