EUR/USD Analysis: Euro Consolidates Near Key Support

EUR/USD ended Wednesday modestly lower as the US dollar remained resilient into the second half of the session. Early Thursday, the pair is trading quietly below the 1.1700 handle, with price action reflecting a cautious market environment rather than any clear recovery attempt. For now, the technical backdrop continues to lean mildly bearish.

US Data Keeps USD Supported

The dollar found support midweek following stronger US data and a risk-averse tone across markets. The ISM Services PMI rose to 54.4 in December from 52.6, confirming an acceleration in service sector activity. More importantly, the employment component rebounded to 52 after spending six consecutive months below the 50 threshold, signalling improving labour conditions.

Later today, attention turns to US weekly Initial Jobless Claims. A print at or below 200,000 would likely reinforce USD strength and keep pressure on EUR/USD. Conversely, a weaker reading above 220,000 could offer short-lived relief for the euro. However, positioning may remain cautious ahead of Friday’s Nonfarm Payrolls report, limiting follow-through in either direction.

Risk sentiment also remains fragile. US equity futures are modestly lower, reinforcing a defensive bias that tends to favour the dollar and weigh on EUR/USD.

EUR/USD Technical Outlook

On the 4 hour chart, EUR/USD is trading near 1.1680, an important technical zone. The 20 period SMA continues to slope lower beneath the 50 and 100 period SMAs, highlighting ongoing downside pressure. The 50 period SMA is declining, while the 100 period SMA has flattened, with price action holding below both averages.

The pair is currently hovering just above the 200 period SMA near 1.1680, which acts as immediate dynamic support. The RSI is positioned near 40, below the neutral midpoint, suggesting muted momentum and limited scope for a meaningful rebound at this stage.

A clear break below 1.1680 would expose the next support levels at 1.1650, the 50% Fibonacci retracement of the 1.1503 to 1.1800 rally, followed by 1.1615 at the 61.8% retracement.

On the upside, initial resistance is located around 1.1690–1.1700, where the 38.2% retracement and the psychological level converge. Beyond that, a stronger recovery would require a move through the 1.1730–1.1740 zone, where the 23.6% retracement aligns with both the 50 and 100 period SMAs.

EUR/USD 4h Chart

Bottom Line

EUR/USD remains vulnerable while trading below 1.1700, with key support at 1.1680 under pressure. In a cautious market environment and ahead of major US labour data, upside attempts are likely to remain limited unless risk sentiment improves or US data meaningfully disappoints.