**EUR/USD Consolidates Losses Amid Market Anticipation for Eurozone Economic Indicators**
*By FXStreet Team*
Original article by FXStreet. This version is an expanded, in-depth restatement.
The EUR/USD currency pair, which measures the euro against the US dollar, is currently trading with a soft tone as it consolidates recent declines. As market participants evaluate the broader implications of the Federal Reserve’s rate trajectory and upcoming economic data from the Eurozone, EUR/USD remains under pressure. Investors continue to heavily position themselves based on expectations around future central bank actions and macroeconomic assessments.
During the early hours of Monday’s European session, the euro attempted to claw back some ground after sustaining losses last week. However, the rebound has remained limited as market temperament hinges on fresh economic cues from the Euro area, particularly in relation to inflation and growth. In parallel, a better-than-expected US jobs market report last Friday has elevated the US dollar.
Below is a comprehensive breakdown of the key factors shaping movement in the EUR/USD pair, as well as the broader market context heading into the week.
## Key Technical Overview
– EUR/USD is trading slightly higher in the early European session but continues to hover below the 1.10 level.
– The broader trend remains bearish on lower timeframes, with repeated failures to break cleanly above 1.1000 signaling ongoing resistance.
– Support is identified near the 1.0920 region, with potential deeper retracement if sellers remain in control.
– Immediate resistance lies at the 1.1000 psychological zone, followed by 1.1040 if upward momentum accelerates.
– 4-hour and daily moving averages are displaying bearish crossovers, adding to the downside risks in the near term.
Technical indicators on the daily chart show momentum stalling, with the Relative Strength Index (RSI) struggling to recover above the midpoint. The Moving Average Convergence Divergence (MACD) histogram continues to drift lower, confirming weakening bullish momentum after the December rally.
## Macro Fundamentals Driving EUR/USD
A number of fundamental variables continue to exert pressure on the EUR/USD currency pair. Last week’s robust US employment data signaled ongoing strength in the American labor market, diminishing expectations that the Federal Reserve might implement a rapid sequence of rate cuts in early 2024.
### United States Labor Market and Fed Policy Outlook
– The US Nonfarm Payrolls (NFP) report released on Friday showed a gain of 216,000 jobs in December, which was well above market expectations around 170,000.
– Unemployment remained steady at 3.7 percent, and average hourly earnings rose by 0.4 percent month-over-month, surpassing estimates of 0.3 percent.
– Combined with a fall in the labor force participation rate, the jobs data reinforced the idea that inflationary pressures could persist due to wage growth, prompting the Federal Reserve to maintain a restrictive monetary stance for longer.
– Market participants are now recalibrating their expectations for the Fed’s path. Interest rate futures are still pricing in a potential rate cut during the first half of 2024, but the latest data has dampened urgency around this expectation.
Following the data, the US dollar rebounded sharply across multiple pairs, including EUR/USD, due to the growing probability that the Fed could choose to delay rate cuts until it sees more sustained inflation moderation.
### Eurozone Outlook and Key Data to Watch
– The European Central Bank (ECB), in contrast, faces ongoing stagnation risks, as much of the Eurozone continues to grapple with subdued economic growth and hesitant inflation.
– This week’s Euro area economic docket includes critical data such as:
– German Industrial Production (Monday)
– Eurozone Retail Sales (Tuesday)
– French and Italian Industrial Output (Wednesday and Thursday respectively)
– ECB policymakers’ speeches throughout the week, including remarks from President Christine Lagarde and Chief Economist Philip Lane
– The most closely watched dataset will
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