EUR/USD price falls for fourth straight day amid ECB easing signals
EUR/USD almost matches the price at the start of the year
The EUR/USD pair is set to record its fourth consecutive day of decline on the last day of January 2025, as the Euro extends losses against the U.S. dollar this week.
This downturn comes on the heels of softer-than-expected Consumer Price Index (CPI) data from six German states, suggesting that inflationary pressures across the Eurozone might be cooling off, moving closer to the European Central Bank's (ECB) target of 2%. The development has fueled optimism that the ECB might continue to ease monetary policy, as indicated by ECB President Christine Lagarde during Thursday's press conference.
Lagarde emphasized that the ECB is still in restrictive territory, hinting at further policy adjustments without specifying when they might conclude. On Friday, ECB policymaker Madis Muller reinforced this narrative by stating that achieving inflation near 2% by mid-year is a realistic target. Such comments have contributed to the Euro's broad-based weakening, as market participants adjust their expectations for future ECB actions.
Technical analysis further lends to EUR/USD downside targets
During today's European trading session, EUR/USD saw a minor uptick but was quickly turned back by resistance at the 50 EMA on the 4-hour chart, pegged at 1.0405. This led to a further drop to an 8-day low of 1.0372, erasing nearly all of January's gains, with the pair now just 0.1% above its opening level for the year of 1.0355.
EUR/USD price dynamics (November 2024-January 2025). Source: TradingView.
Technical indicators also reflect this bearish sentiment; the RSI on the daily chart has shifted into bearish territory, although the 4-hour RSI has not yet reached oversold conditions, suggesting potential for further downside before a possible rebound.
This week's decline contrasts with the upward trend observed in previous weeks sets the stage for the euro to continue to weaken, or reverse as traders digest the upcoming U.S. core PCE (Personal Consumption Expenditures) data.
The EUR/USD pair slipped below the 50-day EMA at 1.046, reaching a 4-day low. The pair steadied at 1.042 after two consecutive bearish sessions, as traders awaited the ECB rate decision.
