EUR/USD started the new year on a soft footing, edging lower toward the 1.1740 area at the time of writing, after topping above 1.1800 in the final days of December.
Trading conditions remain subdued, particularly during the Asian session, as markets in China and Japan stay closed for New Year holidays, keeping volumes thin and price action contained.
Despite the modest pullback, the pair is still trading relatively close to its three-month peak at 1.1808 reached just before Christmas, highlighting the broader resilience of the Euro against the US Dollar.
From a broader macro perspective, the US Dollar (USD) has lost around 14% against the Euro over the course of 2025. The Greenback has been under sustained pressure due to investor concerns over US President Donald Trump’s unpredictable trade policies, growing signs of a slowdown in the US economy, and an increasingly visible divergence between the monetary policy outlooks of the European Central Bank (ECB) and the US Federal Reserve (Fed).
Macro focus remains on PMI data amid low liquidity
Attention on the macroeconomic front is turning to the release of final HCOB Manufacturing PMI figures across the Eurozone and key member states. These data points are among the few scheduled releases capable of generating short-term movement in an otherwise quiet market environment.
In the US, the S&P Global Manufacturing PMI is also due later in the session and could offer some limited direction for the USD, although any reaction is likely to be muted by ongoing holiday conditions.
Daily digest market movers: consolidation dominates early-year trade
The Euro continues to show a mild bearish bias, in line with price action seen earlier in the week, as most major currencies remain trapped within narrow ranges. The lack of high-impact economic releases and reduced participation due to New Year bank holidays are keeping volatility suppressed.
In Europe, the final German HCOB Manufacturing PMI is expected to confirm a deeper contraction in factory activity, with the index seen at 47.7 in December, down from 48.2 in November.
At the Eurozone level, the HCOB Manufacturing PMI is forecast at 49.2, extending its gradual decline from 49.6 in November and 50.0 in October, and reinforcing the view that manufacturing remains under pressure.
Later on Friday, markets will turn their attention to the US S&P Global Manufacturing PMI. The preliminary estimate pointed to a slowdown to 51.8 in December from 52.2 previously, consistent with moderate but decelerating growth in business activity.
Beyond the immediate data flow, investors are already looking ahead to next week’s US Nonfarm Payrolls report, as well as the anticipated announcement of the successor to Fed Chair Jerome Powell, expected in the coming weeks.
Technical analysis: EUR/USD pressure builds below broken trendline
From a technical standpoint, EUR/USD retains a bearish near-term structure after breaking below a key trendline drawn from the mid-November lows. On the 4-hour chart, the Relative Strength Index (RSI) remains capped below the 50 level, while the Moving Average Convergence Divergence (MACD) stays in negative territory, although the flattening histogram suggests that bearish momentum may be losing some intensity.
For sellers to confirm a more decisive trend shift, a clear break below the December 17 and 19 lows near the 1.1700 handle is required. Such a move would expose the December 4 high and December 11 low around 1.1680, followed by the December 8 and 9 lows close to 1.1615.
On the upside, recovery attempts have so far been limited near 1.1764. Further resistance is located around the descending trendline at 1.1785, while the December 16 and 24 highs above the 1.1800 psychological level remain a significant barrier for bulls.
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