EUR/USD price pressured as eurozone wage growth hits 5.42%
Eurozone's economic woes limit EUR/USD upside amid fragile growth narrative
EUR/USD price movement continues to trade in a slightly bullish channel, hovering between resistance at 1.0600 and support at 1.0500.
Despite the euro's attempts to gain traction, the pair remains under pressure. The dollar index, which saw three consecutive bearish days, recovered some strength during the European session on Wednesday, bouncing off 105.770 support zone. This renewed momentum weighed on the euro, keeping the pair's upside in check.
EUR/USD price dynamics (October-November 2024). Source: TradingView.
Eurozone economic woes taints EUR/USD outlookData released by the European Central Bank (ECB) on Wednesday revealed that negotiated wages in the Euro area surged by 5.42% year-on-year in Q3 2024, up from 3.53% in Q2. Despite this acceleration, the euro failed to gain significant support due to a broader narrative of “fragile economic growth,” highlighted in the ECB’s Financial Stability Review, thus limiting optimism for the currency.
The eurozone economy remains under pressure from high borrowing costs and weak growth potential. Corporate profits are shrinking due to rising interest payments, while fiscal fundamentals in several countries remain fragile. Elevated debt levels and budget deficits continue to fuel concerns about sovereign debt sustainability. These structural weaknesses further challenge the euro’s ability to strengthen against the dollar.
EUR/USD is currently declining from the 1.0600 resistance level, trading near 1.0550. And technical indicators are pointing to further weakness. Both the 50 and 100 EMAs are bearish, suggesting that the base support of the bullish channel may not hold. On the 4-hour chart, the RSI has dipped slightly below 50, reinforcing the likelihood of continued downside movement. If there's a break below 1.0500, it could open the door to subsequent lower levels, adding to the challenges for the euro in an already fragile macroeconomic environment.
EUR/USD faces mixed signals as traders weigh upbeat Eurozone data against the broader economic outlook. The pair slipped 0.7% as the euro struggled to gain traction despite positive regional indicators.
