EUR/USD remains stable, unaffected by disappointing Eurozone manufacturing figures

On Monday, the euro (EUR) was nearly unchanged against the US dollar (USD), trading at around 1.1865. The factory output figures from the Eurozone for December reflected expectations of a significant drop, yet the currency pair didn’t see much movement, likely due to lower trading volumes.

Data from Destatis revealed that Eurozone industrial production dipped by 1.4% in December. It was generally anticipated that the month would see a 1.5% decline after the growth for November was adjusted down from 0.7% to 0.3%. In a year-on-year comparison, production growth eased to 1.2%, slightly surpassing the predicted 1.3%, but falling short of November’s 2.5% growth.

In recent days, the pair has been trading within a consistent range. Following the publication of U.S. consumer price index (CPI) results, which were softer than expected, the euro had little momentum on Friday, which might open the door for the Federal Reserve to reduce borrowing costs further to aid a sluggish job market.

Monday’s trading activity remained quiet, as many Asian markets, including Japan, are shut down for the Lunar New Year holiday, while U.S. markets are closed in observance of Presidents’ Day. However, speeches expected later from Federal Reserve Vice Chair Michel Bowman and European Central Bank President Joachim Nagel might provide some distraction in what is otherwise a calm trading day, ahead of a week filled with data releases.

technical analysis

The current 4-hour chart indicates that EUR/USD is maintaining its position above the uptrend line that started from the mid-January low of 1.1855, with further support found near the February 11 low of 1.1833.

The indicators are somewhat neutral to negative at this point. The Moving Average Convergence Divergence (MACD) is hovering just below the zero line, and the Relative Strength Index (RSI) is slightly under 50, which suggests a pretty balanced momentum.

If the pair drops below 1.1833, the next target would likely be the early February low around 1.1775. On the other hand, on the upside, the 38.2% Fibonacci retracement level of the late January reversal has kept the bulls at bay around 1.1890, preventing a run toward the previous week’s high of 1.1925.

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