EUR/USD Market Update

The EUR/USD saw a slight increase of over 0.15% on Monday, maintaining the 1.1600 level. This movement came amidst a weakening US dollar, spurred by assertive remarks from Bank of Japan Governor Kazuo Ueda. The softer economic conditions across both the US and Europe have contributed to a more favorable outlook for the euro.

As the Bank of Japan leads a risk shift and speculation mounts regarding potential changes in Federal Reserve leadership, the US dollar continues to decline, allowing the euro to edge higher.

In the US, the November Purchasing Managers’ Business Index (PMI) was published, indicating a slowdown in manufacturing. Comments from the Institute for Supply Management (ISM) highlighted that job reductions in the transportation equipment sector are being directly associated with President Trump’s tariffs.

Additionally, the dollar’s decline accelerated due to rumors that National Economic Advisor Kevin Hassett might be in line to take over from Federal Reserve Chairman Jerome Powell, whose term is set to expire in May 2026.

Over in Europe, the HCOB Manufacturing PMI was released for the region, though data from Germany and the euro area were not included. France met expectations, while Spain and Italy surpassed them. This news had minimal effect on EUR/USD but could hint at a favorable outcome for the Ukraine-Russia situation.

Looking ahead, this week will see the EU’s economic document, featuring the Harmonized Index of Consumer Prices (HICP). Meanwhile, the US will reveal figures on ADP employment changes, ISM services PMI, new jobless claims, and the core PCE— which is the Fed’s preferred inflation measure.

Daily Market Movements: EUR/USD Maintains Position Above 1.1600

• Bank of Japan Governor Ueda remarked, “The Bank of Japan is now at a stage where it needs to assess the sustainability of aggressive wage-setting by companies.” He noted the necessity of a close examination of both domestic and foreign economic conditions and market trends when pondering potential interest rate hikes.
• ISM’s manufacturing PMI dipped to 48.2 last month, down from 48.7 in October, with the employment subcomponent dropping from 46 to 44. Interestingly, however, prices paid increased slightly from 58 to 58.5, though still short of the expected 59.5.
• There are rising expectations for the Fed to lower rates, with the CME FedWatch tool showing an 87.4% likelihood of a 25 basis point cut in December, up from 86% last Friday.
• Germany’s HCOB flash manufacturing PMI declined to 48.2 in November from 49.6 the previous month, mainly due to a drop in new orders, particularly exports, amid diminished demand from Asia, Europe, and North America.
• ECB member Martin Kocher stated that the ECB should engage in a thorough discussion about interest rates, suggesting that small deviations above or below the 2% target don’t necessitate immediate action, as micromanaging monetary policy isn’t the goal.

Technical Analysis: Euro Holds Steady Around 1.1600, Awaiting Catalysts

EUR/USD remains capped around the 1.1612/42 zone, correlating to the 50-day and 100-day simple moving averages (SMA). Currently, bullish trends are evident in the Relative Strength Index (RSI), even though short-term momentum may keep it relatively stable.

If the bearish trend continues, the first support for EUR/USD stands at 1.1600, with the next level being the 20-day SMA at 1.1571. Should this level break, the low from November 21st at 1.1491 could come into play, followed by the 200-day SMA at 1.1443.