The euro has shown a glimmer of recovery, trading in positive territory after the significant decline witnessed on Monday. The market’s attention is now split between multiple factors that could potentially sway its course.
This Tuesday, the spotlight is on the US JOLTS Jobs Openings report for October. Market expectations suggest a figure of 7.48 million job openings, a slight increase from the previous 7.443 million. This data release comes at a crucial time, just prior to the bustling retail-intensive Christmas Holiday period, and is likely to have implications for the broader economic outlook and currency markets.
On the European front, there has been a shift in the Spanish employment scenario. In November, the unemployment rate dipped by around 16,000 individuals, a welcome change following the 26,800 spike in joblessness during the previous month.
Adding to the mix of market-moving events is the political unrest in France. Bloomberg has verified that a vote of no confidence is set to occur on Wednesday. This development has the potential to introduce significant volatility and uncertainty, not only in the French domestic market but also across the eurozone.
European equities have experienced a positive trading session, although they have pulled back from their intraday peaks. Notably, the German Dax achieved a milestone, reaching 20,000 points for the first time. However, the sentiment is tempered by concerns raised by European Central Bank (ECB) Executive Board member Piero Cipollone. He stated on Tuesday that Europe’s growth is falling short of its potential, and the looming threat of US tariffs could further impede growth prospects. This has led to speculation that the ECB may consider more substantial rate cuts, as reported by Bloomberg.
Technical Analysis: EUR/USD’s Outlook Before US Session
The EUR/USD pair is facing an uphill battle to regain its footing after the sharp correction in November. The market has been factoring in the policies of US President-elect Donald Trump, but there is a degree of uncertainty. If it becomes evident that some of his bold statements were merely strategic bargaining tools for reaching agreements, the market’s expectations could shift.
While major banks have predicted parity for the EUR/USD pair, it remains uncertain whether this will actually transpire. There is a possibility that the pair could retrace back to 1.0600 and 1.0800 in the upcoming weeks. This could be driven by traders adjusting their positions as the Christmas season and year-end approach.
From a technical perspective, on the upside, three distinct resistance levels are in focus. The initial hurdle is the 2024 low of 1.0601, recorded on April 16. Should this level be breached, the triple bottom formation from June at 1.0667 would present the next obstacle. Higher still, the round level of 1.0800, which aligns approximately with the ascending green trend line originating from the October 3, 2023 low, could prove to be a significant barrier.
On the downside, in terms of support, the 2023 low of 1.0448 is a key technical level to watch. Additionally, the current two-year low at 1.0332 is another area of concern. Further down, 1.0294 and 1.0203 are subsequent levels that could potentially come into play.
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