The Euro (EUR) is trading nearly flat against the US Dollar (USD) on Monday, recently hovering around the 1.1865 mark. Fresh Eurozone factory output data released earlier this morning confirmed market expectations of a notable decline in December, yet the pair’s movement remains largely unchanged due to subdued trading activity.
The latest figures show that Industrial Production in the Eurozone contracted by 1.4% in December, as reported by Destatis. This figure aligns closely with the market consensus, which projected a 1.5% decline following a downward revision of November’s growth from an initially estimated 0.7% to 0.3%. On a year-over-year basis, production growth decelerated to 1.2%, slightly missing the anticipated 1.3% and substantially lower than November’s impressive 2.5% growth.
In recent trading sessions, the EUR/USD pair has stayed within a narrow range. Despite the release of softer-than-expected US Consumer Price Index (CPI) figures last Friday, which could have provided the Euro with some momentum, the currency struggled to gain traction. The softer CPI figures led to expectations that the Federal Reserve (Fed) may further ease borrowing costs to stimulate a sluggish labor market.
Trading activity remains muted on Monday. Many Asian markets, including Japan, are closed in observance of the Lunar New Year holiday, and United States markets will also be closed for President’s Day. As the day progresses, speeches from key figures such as the Federal Reserve’s Vice Chair of Supervision, Michelle Bowman, and European Central Bank Governor, Joachim Nagel, may provide some distraction from the otherwise calm market environment, particularly ahead of a data-heavy week.
From a technical standpoint, the 4-hour chart indicates that the EUR/USD is sitting just above a rising trendline from mid-January lows, currently positioned at 1.1855. This level, in tandem with the February 11 low of 1.1833, is offering support to the pair. Momentum indicators reflect a neutral to negative sentiment, with the Moving Average Convergence Divergence (MACD) slightly below the zero line and the Relative Strength Index (RSI) close to 50, suggesting a balanced market environment.
Should the pair fall below the support level of 1.1833, the next target would be early February lows around the 1.1775 region. Conversely, resistance is noted at 1.1890, which corresponds to the 38.2% Fibonacci retracement of the late January reversal, and a closing price above this level could open the way toward last week’s highs of 1.1925.
As these developments unfold, market participants continue to closely monitor both economic indicators and central bank commentary to gauge the potential direction of the Euro and other currencies in the coming days.
