Euro Slips Amid Quiet Holiday Session and Dovish ECB Tone

Fundamental Analysis

* Holiday Hush: The Euro drifted lower against the U.S. dollar amid subdued trading activity, as many traders remained on holiday ahead of the New Year. Sentiment was dampened by a dovish tone from the European Central Bank (ECB), with Governing Council member Boris Vujcic indicating that further rate cuts are likely if data aligns with projections. The ECB has already reduced rates four times this year, bringing the deposit rate to 3.0%, with analysts expecting further quarter-point cuts to 2.0% by June. Meanwhile, U.S. labor market data revealed that Initial Jobless Claims fell to 219,000 for the week ending December 21, the lowest in a month and below market expectations of 224,000, signaling continued strength in the U.S. economy.

Technical Analysis

* Technical Breakout: EURUSD was trade lower following prior retracement from its recent high. MACD which illustrates diminishing bullish momentum signal suggest the pair to likely extend its retracement.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.03600. Conversely, a potential reversal is also to be expected and the price could head back towards 1.04600.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

As the holiday season begins and the economic calendar remains relatively light, market sentiment is expected to be the primary driver of market activity.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Eurozone data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.