Euro Under Bearish Pressure:Factors,Figures, and Technical Setup

16 de jan.

Euro Under Bearish Pressure: Factors, Figures, and Technical Outlook

The Euro is grappling with increased bearish pressure, marked by a reversal against the backdrop of a strengthening US Dollar and various economic indicators. Amidst a risk-averse market sentiment and geopolitical tensions in the Middle East, the Eurozone faces headwinds that are impacting the common currency.

Economic Indicators and Sentiment:

Eurozone Industrial Production, as revealed by Eurostat on Monday, reflected a 0.3% month-on-month decline in November, following a 0.7% fall in October. On an annual basis, Industrial Production showed a 6.8% year-on-year decrease in November. This weakness in the production sector, particularly evident in Germany and Italy, has intensified selling pressure on the Euro. Furthermore, the risk-averse sentiment, fueled by diminishing expectations of rate cuts in 2024, adds to the Euro's challenges.

Central Bank Dynamics:

Despite hawkish comments from European Central Bank (ECB) Governor François Villeroy de Galhau downplaying rate cut expectations, the Euro struggles to find significant support. Additionally, the German Consumer Price Index (CPI) uptick fails to reverse the bearish momentum.

Technical Analysis:

From a technical standpoint, the EUR/USD pair has retreated to the 61.8% Fibonacci area, a robust demand zone with a history of providing support. The recent bounces from this level indicate its significance. Our outlook leans towards a potential upside movement, suggesting a return to the bullish main trend.

Conclusion:

The Euro's current predicament, influenced by economic indicators, geopolitical tensions, and market sentiment, poses challenges for investors and traders. While hawkish central bank remarks and local CPI data attempt to lend support, the technical analysis suggests a potential reversal from the key Fibonacci level. As investors closely monitor these dynamics, the coming sessions will unveil whether the Euro can regain strength and resume its bullish trajectory.



Our preference

Long positions above 61.8% Fibo with targets at 1.10170 & 1.1140 in extension.