The EUR/USD currency pair has paused its three-day losing streak, managing to keep its Relative Strength Index (RSI) from entering oversold territory. However, should the RSI dip below 30, it could signal further declines, mirroring patterns observed in prior bearish trends.
Key Levels and Technical Outlook
EUR/USD recently failed to defend its November low of 1.0333, as it struggled to recover from losses triggered by post-election market movements in the United States. The pair continues to trade below its 50-day Simple Moving Average (SMA) of 1.0569, which maintains a downward slope, signaling persistent bearish pressure.
Despite this, EUR/USD has rebounded slightly ahead of the 1.0200 level, a key support zone aligned with the 23.6% Fibonacci retracement. This move has helped keep the RSI above the critical 30 mark, temporarily easing concerns of further declines. If the pair breaks above 1.0370, corresponding to the 38.2% Fibonacci extension, it could target the zone between 1.0448 and 1.0480, marking prior lows from 2023.
The next significant resistance levels are at 1.0580, aligned with the 78.6% Fibonacci extension, and 1.0610, linked to the 38.2% Fibonacci retracement. However, sustained bearish momentum and the negative slope of the 50-day SMA suggest the pair may struggle to maintain its current rebound.
Failure to hold above the 1.0200 support could push EUR/USD toward parity, with the next key support level around 0.9950, corresponding to the 50% Fibonacci extension.
Broader Market Context
The rebound in EUR/USD coincides with a muted market response to the U.S. ISM Manufacturing survey, which showed the index rising slightly to 49.3 in December from 48.4 the previous month. This limited reaction suggests that the pair’s recent movements are primarily technical in nature, with traders focusing on key support and resistance levels.
Looking ahead, the opening trading range for 2025 will be critical for EUR/USD. While the pair has stopped carving a series of lower highs and lows for now, a breach of key technical thresholds could reignite bearish momentum, especially if the RSI slips into oversold territory.
Conclusion
EUR/USD’s short-term rebound provides a temporary reprieve, but the broader technical and fundamental picture remains bearish. Key levels, including 1.0200 on the downside and 1.0580 on the upside, will likely dictate the pair’s direction in the coming days. As markets enter the first full trading week of January, traders will closely monitor these thresholds for signs of sustained movement or a potential return to parity.
