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Created on January 07, 2025

• According to recent trades and after its sharp losses, the EUR/USD exchange rate is heading towards parity.
• Before that, investors will be watching closely for the reaction to the release of US jobs data next Friday.
• According to reliable trading platforms, the euro price has fallen to its lowest level in two years against the US dollar amid sharp gains for the US currency.
• As a result, all indicators indicate that the euro dollar exchange rate is on its way to testing 1.0 and below.

Can You Buy the Euro-Dollar Now?

In this regard, European fundamentals are difficult for euro sellers looking to buy the US dollar, and contrast markedly with US fundamentals, as the US economy is still in good shape. The dynamics of the gas market embody the stark difference in economic fortunes. From one side, Europe faces headwinds amid rising natural gas prices. From anther, the US is receiving tailwinds as the US is the one stepping into the void left by Russia in the European gas market.

US Jobs Data Under the Microscope

According to this week’s economic calendar, the US non-farm payrolls report on Friday is the key data release for this week’s trading, and if the US jobs numbers come in stronger than expected, bears could find an opportunity to push the EUR/USD price towards deeper bearish levels. Overall, analysts expect US job gains to remain high in December at 180,000, recording only a modest slowdown from 227,000 in November.

On the other hand, leading survey indicators have improved recently, confirming the strong position of the US economy, which is consistent with the continued strength of the US dollar. However, the market is well-positioned for a strong jobs reading, and there is a chance of a US dollar decline if the data meets expectations or comes in weaker.

Consequently, this could allow the EUR/USD pair some respite over the weekend.

Tomorrow, another development affecting the forex market is that on Wednesday, the minutes of the Federal Reserve’s last meeting for 2024 will be released. During which it cut interest rates but warned that it is unlikely to do so in 2025, which pushed the US dollar higher. In addition, there is a lot of uncertainty in the outlook with Donald Trump poised to return to the White House. Currently, analysts believe that Trump will bring inflationary policies, which will require the Federal Reserve to abandon further US interest rate hikes. All of this will ultimately support the US dollar.

On the Eurozone front, the focus will be on German inflation data for December, which will provide an important hint as to where we can expect the Eurozone data to be. Overall, analysts expect Eurozone CPI inflation to rise to 2.4% year-on-year in December from 2.2% in November. However, analysts do not believe that this will be enough to upset expectations of further interest rate cuts by the European Central Bank, which could limit any rise in the Euro.

Trading Tips:

The EUR/USD will remain bearish until the announcement of important US economic data and events this week

EUR/USD Technical Analysis Today:

According to recent trades, the EUR/USD exchange rate has risen to match the nine-day exponential moving average (EMA), indicating that it has recovered from some of the peak selling levels seen in recent trades. Technically, it is noteworthy that this nine-day EMA has acted as a resistance layer to the strength of the EUR/USD pair since October. Therefore, this technical indicator indicates a decline, suggesting that there may be some retreat from the negative pressure.

Overall, it is difficult to be pessimistic about the EUR/USD pair in the current technical and fundamental macroeconomic situation, and the chances of recovery from here are limited. Meanwhile, the exchange rate may hold around 1.03-1.04 in the near term as markets wait for a catalyst for the next decline. Also, most markets may have been on a break during the Christmas and New Year period, the EUR/USD has not rested, as the selling wave that has been ongoing since October has extended. Ultimately, the recent losses came after a renewed rise in European gas prices to their highest levels in two years.

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