The current uptrend in the EURUSD chart can face difficulties, while the downtrend does not have enough reason to last long.
The economic calendar shows that Eurozone economic activities increased in December and beat the markets' estimates.
This week's European data started on Monday and with manufacturing PMI from Spain, Italy, French, Germany, and Eurozone. All data confirmed the slow growth compared with November numbers; even if the actual number in Germany was less than estimates and Eurozone Manufacturing PMI at 47.8 was in line with estimates, both show meaningful growth compared with the previous month.
On Tuesday, the number of unemployed people in Germany declined by 13,000 after seasonal adjustment in December, far better than market expectations and a 15,000 rise in November. With decreasing unemployment numbers, the unemployment rate also fell slightly to 5.5% after seasonal adjustment, down from 5.6% in November. Also, German consumer inflation (CPI) in December eased significantly to 8.6% annually, much lower than the 9.1% estimates and 10.0% in November.
On Wednesday, upbeat data continued with service PMIs. Wednesday's data also confirmed the better activities in the service sector. December service PMIs in all leading European economies beat the estimates and raised much higher than November numbers. Eurozone S&P Global Composite PMI in December at 49.3, beating the 48.8 estimates and rising from 47.8 in November. The same for Eurozone Services PMI rose to 49.8 in December, better than estimates and November levels, respectively, at 49.1 and 48.5.
The latest survey shows that most economists expect the European Central Bank to stop raising interest rates in the first half of this year due to the pressure of the recession. In addition, earlier this week, IMF Managing Director Georgieva pointed out that half of the EU economies will face economic recession this year. Among them, Italy is expected to be the first member state of suffering the impact.
Despite better PMI numbers, this pessimistic outlook will increase the pressures on Euro. At the same time, if we face a recession, USD demand can grow, which means the current overall uptrend in the EURUSD chart can face difficulties, while the downtrend also has not enough reason to last long. From the technical point of view, EURUSD remains bullish, incredibly, as long as it trades above 1.034. any return under this level can change the trend.
