EUR/USD price recovers above 1.0500 despite mixed eurozone data
The euro found buying interest near the 1.0460 level
EUR/USD has recently reversed its downward momentum, bouncing off key support levels and testing crucial resistance.
After a five-day consecutive decline, the euro found buying interest near the 1.0460 level, which halted further losses. By Friday's close, the pair had reclaimed the 1.0500 psychological level. This recovery comes amid mixed economic data from the Eurozone, where the manufacturing sector remains in contraction while the services sector shows signs of growth.
EUR/USD price dynamics (November-December 2024). Source: TradingView
The latest HCOB Purchasing Managers' Index (PMI) data, published on Monday, revealed the Eurozone's manufacturing PMI remained unchanged at 45.2 for December, slightly better than the expected 45.0. However, the services PMI rose sharply to 51.4, up from 49.5 in November, surpassing market expectations of 49.4. As a result, the composite PMI rose to 49.5, its highest in two months, reflecting a modest improvement in overall economic activity.
Despite the ongoing contraction in manufacturing, the Eurozone's services sector shows resilience, providing support for the single currency. This comes as the European Central Bank (ECB) remains resolute in its policy stance, with Vice President Luis de Guindos reiterating the ECB’s commitment to curbing inflation and the expectation that inflation will return to target by 2025.
EUR/USD price range-bound between 1.0460 support and 1.0530 resistance
EUR/USD reacted cautiously to this mixed economic backdrop, holding above the 1.0500 level as it trades in a tight range between 1.0460 and 1.0530, the latter being a significant resistance level. A break above 1.0530 could open doors to potentially test the 1.0600 mark which aligns with the 100-period exponential moving average (EMA).
In the immediate term, the pair is likely to stay range-bound as traders digest the conflicting economic signals from the Eurozone. The key levels to watch are 1.0460 on the downside, which has proven resilient as support, and 1.0530 on the upside, which is crucial for confirming further bullish momentum. If the pair maintains support above 1.0500, a solid break above resistance levels, coupled with further positive data from the services sector, could see the euro continue its recovery.
EUR/USD rallied over 0.4% from the 1.0460 support level to test resistance at 1.0500. Weak industrial activity suggests limited upside potential for the euro in the near term.
