The EUR/USD currency pair demonstrated resilience on December 4, 2023, trading within a limited range despite a series of mixed economic indicators from both Europe and the United States. The pair opened the American session at approximately 1.1760 and experienced fluctuations, peaking at around 1.1794 before settling at 1.1773. This performance reflects the Euro’s ability to maintain its strength despite a backdrop of disappointing data from Europe.
Economic reports indicated a softening of business activity in Europe. According to the Hamburg Commercial Bank, the flash estimates of the December Purchasing Managers’ Index (PMI) revealed that growth in the German private sector slowed for the second consecutive month. The manufacturing PMI fell to 47.7, down from 48.2, while the services PMI eased to 52.6 from 53.1. As a result, the composite PMI dropped to 51.9, down from the previous 52.8. These figures suggest a cooling economic landscape in Germany.
Despite the concerning European data, the Euro remained buoyant. The German ZEW Economic Sentiment survey showed a notable improvement, climbing to 4.8 in December from -38.5 in the previous month. However, the assessment of the current situation deteriorated slightly, decreasing to -81 from -78.7. In a broader context, the economic sentiment in the European Union surged to 33.7, up from 25.0 in November.
The US economic data also painted a mixed picture, contributing to the volatility of the USD. The ADP Employment Change report indicated that the private sector added an average of 16,250 new jobs in the week ending November 29, a significant rise from the previous week’s average of 4,750. Nevertheless, the November Nonfarm Payrolls report revealed that only 64,000 new jobs were created, following a loss of 105,000 jobs in October. Additionally, the unemployment rate increased to 4.6%, higher than both previous estimates and expectations.
In terms of consumer activity, the October Retail Sales figures remained unchanged, following a revised 0.1% gain in September. This stagnation further underscores the challenges facing the US economy, particularly in the context of rising inflation and changing consumer sentiment.
Technical Outlook for EUR/USD
From a technical perspective, the EUR/USD pair maintained a bullish trend, trading above its moving averages. The 20-period Simple Moving Average is positioned above the 100 and 200 SMAs, all showing upward slopes, which reinforces a positive outlook for the pair. The price is currently supported by the 20 SMA at 1.1744, suggesting a solid foundation for potential upward movements.
The Relative Strength Index (RSI) stands at around 69.2, indicating continued buying momentum. Meanwhile, on the daily chart, the EUR/USD remains above all key moving averages, with the 100-day SMA providing support at 1.1647 and the 20-day SMA at 1.1630 further bolstering the bullish case.
As the market digests these economic indicators, investors will be keenly watching for any shifts in sentiment that could affect the EUR/USD pair. The combination of soft US job growth and the mixed economic landscape in Europe sets the stage for potential volatility in the coming days.
