Created on December 26, 2024

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Bullish View

• Buy the EUR/USD pair and set a take-profit at 1.0500.
• Add a stop-loss at 1.0300.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0375 and a take-profit at 1.0300.
• Add a stop-loss at 1.0500.

The EUR/USD pair was largely unmoved on Thursday as European markets remained closed for Boxing Day. It was also unchanged as the Christmas season continued, with most traders and investors remaining away. It was trading at 1.0400, where it has remained at this this week.

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The EUR/USD pair will react mildly to the upcoming US initial and continuing jobless claims data. Economists expect the data to show that the initial claims rose by 222k last week, while the continuing claims rose to 1.874k.

The pair has been in focus amid a potential divergence between the United States and Europe. Recent data showed that the European economy is continued to contract in the third quarter, with countries like Germany and France being some of the most affected.

The Federal Reserve and the European Central Bank (ECB) have also diverged. In Europe, the ECB has hinted that more rates were coming, while the Fed has hinted that it will only slash rates two times. That explains why the US dollar has jumped against the euro.

Additionally, the EUR/USD pair has also struggled as investors anticipate the upcoming Donald Trump administration. Trump has hinted that he will implement higher tariffs on European goods moving to the United States, which will affect the economy.

EUR/USD Technical Analysis

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The EUR/USD pair has been in a strong downtrend as the US dollar index (DXY) has surged to the highest level since 2022. It has dropped from 1.1213 in September to 1.0400, lower than the key support at 1.0450, its lowest point in September.

The pair has held steady below the 50-day Exponential Moving Average. Also, the MACD indicator, which is used to identify convergence and divergence, has remained below the zero line.

The Relative Strength Index (RSI) has remained below 50 and formed a symmetrical triangle pattern. On the other hand, it has formed a double-bottom pattern at 1.0350. A double-bottom is a popular bullish sign.

Therefore, the pair will likely have a relief rally in the next few days. If this happens, the next point to watch will be at 1.0500. A drop below the support at 1.0350 will point to more downside to 1.0300.

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