EURUSD Makes Marginal Gains As Market Remains Cautious Ahead of Key US Data

Summary:
• EURUSD has leveraged Wednesday's release of positive industrial production data, but investors will likely go easy as they wait for US data.

EURUSD has risen marginally in the early London trading session on Thursday, as investors eye hints from key market fundamentals later today.  After gaining +0.18% on Wednesday, the pair inched up 0.05% to trade at 1.0732 at 7.55 GMT on Thursday. The euro remains near three-month lows against the US dollar, but that will likely change by the end of the week as key indicators come out of the US and the Eurozone.

The euro is currently buoyed by Wednesday’s news of a rise in industrial production in December. The Eurozone industrial production rose by 2.6% month-on-month to December, beating the forecast estimate -0.2%. This has renewed confidence of a recovery of the long-struggling economic block, whose GDP growth flattened in Q4 of 2023.

Furthermore, European Central Bank (ECB) President’s speech early on Thursday reiterated that the block will stick to its disinflationary process as aims for the 2% inflation target. The Eurozone’s inflation rose by 0.5% in December 2023, and cooled down in 2.8% in January 2024. These figures have done little to reverse the euro’s weekly losses.

However, the biggest market mover on Thursday will likely be the US Core Retail Sales data and Initial Jobless Claims figures for January. The former provides insights into the purchasing power of consumers, and is projected to come in at 0.2%. Significant shifts from this figure could trigger major price action by the EURUSD pair. Similarly, the Initial Jobless Claims figures are a barometer for the US economy, and the degree of divergence from the projected 219,000 claims will create impactful sentiments around the pair.

Technical analysis

The EURUSD trading pair has established a pivot at 1.0710, from which the RSI indicator favours upside momentum. If the bulls continue controlling the market, we will likely see them reach for the first resistance at 1.0740. Furthermore, if they manage to breach that level, the pair could rise as high as 1.0755.

Alternatively, the current market momentum could slow down, thus favouring the sellers. Such a move would be signaled by prolonged price action below 1.0710 and be confirmed if EURUSD breaches the first support at 1.0695. Further bearish conditions beyond that point could see the pair test the second support at 1.0680.

EURUSD 30 minute price chart