Can hawkish Fed remarks and jobless claims data pressure EUR/USD?

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Euro vs Dollar drops 0.56% today

Highlights

The US Dollar advanced after lower-than-expected US Initial Jobless Claims and hawkish Federal Reserve comments raised expectations for tighter monetary policy.
Haven demand for the US Dollar outweighed support for EUR/USD from falling Treasury yields and oil prices, shifting investor preference toward the greenback.
EUR/USD trades below key moving averages with bearish momentum, an expected 1.1079 to 1.1191 range and high probability of further downside.

US dollar demand revives as jobless claims and Fed signal tightening

The US Dollar rebounded on Thursday after a post-election sell-off, supported by lower-than-expected US Initial Jobless Claims and hawkish comments from Federal Reserve officials, which reinforced expectations for tighter US monetary policy and increased demand for the greenback, according to Tmgm. This shift weighed on EUR/USD as investors favored the US Dollar in search of safety, a trend further underscored by Thoughtsfortheday Substack's observation that haven demand outweighed effects from rate differentials. Meanwhile, FXStreet reported that prior gains in EUR/USD were partially offset as falling Treasury yields and oil prices temporarily supported the Euro before renewed US Dollar strength reasserted control.

Bearish momentum builds as euro tests oversold technical zones

On the H1 timeframe, EUR/USD remains below its MA-20, MA-50, and well beneath the MA-200, confirming persistent negative momentum across short and long-term horizons. The Ichimoku Kijun level at $1.1202 signals immediate resistance, while intraday support is found near $1.1079. MACD and ADX both reflect ongoing bearish momentum. RSI, Stoch RSI, and CCI have fallen into oversold territory, indicating the risk of a short-term corrective rebound. Bull/Bear Power is negative, highlighting seller dominance, while the Awesome Oscillator remains neutral as price fluctuates close to session lows.

Volatility corridor expected as downside risk dominates near term

Over the coming two to three days, EUR/USD is expected to fluctuate between $1.1079 and $1.1191, forming a typical volatility band relative to current levels. The dominant scenario favors price oscillation within this corridor, as strong bearish momentum continues. A move above $1.1202 would indicate a violation of resistance and open the way for a short-lived recovery, while a breakdown below $1.1079 would confirm renewed downside pressure and further losses for the pair.

Viktoras Karapetjanc, expert at Traders Union, sees the recent US Dollar rebound as a clear market reaction to strong macroeconomic signals. He believes persistent bearish momentum in EUR/USD aligns with the shift in sentiment driven by US data and Federal Reserve commentary. He notes that technicals suggest continued pressure, but short-term corrections are possible if support holds. 'If EUR/USD manages to stay above $1.1079, a temporary rebound could develop, yet the broader macro picture still favors the US Dollar,' Karapetjanc says.

Earlier, analysts noted that persistent eurozone economic weakness and resilient U.S. data had tilted the EUR/USD outlook to the downside. The current setup, with the pair entrenched below major moving averages and strong bearish momentum prevailing, places a heightened focus on $1.1202 resistance and $1.1079 support as pivotal levels for near-term price action.

Source of Data: EUR Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.