EUR/USD Slumps Below 1.0400 as Holiday Trading Cools

The EUR/USD pair slipped below the 1.0400 level on Monday as subdued trading volumes characterized the final days of the year. With many markets closed for the New Year’s holiday, investor activity has significantly diminished, leading to muted price action across most asset classes.

The upcoming holiday week will see further volume constraints, with German equity markets closed on Tuesday and Wednesday. While German final HCOB Manufacturing PMI figures are scheduled for release on Thursday, their impact on the Euro is expected to be limited.

Focus Shifts to US Data and Fed Speakers

The key economic data release this week will be the December US ISM Manufacturing PMI figures, expected on Friday. A decline in the index is anticipated, potentially further dampening market sentiment.

Meanwhile, several Federal Reserve policymakers are scheduled to make public appearances throughout the week. These speeches will likely focus on the Fed’s recent shift towards a more cautious monetary policy stance, with a lower number of rate cuts expected in 2024 than previously anticipated.

Technical Outlook: EUR/USD Faces Downward Pressure

The EUR/USD pair has been steadily drifting lower, battling back into the low end of its recent trading range. The immediate support level for the pair lies near 1.0350, a level that has held in recent weeks.

The pair is on track to close lower for the fifth consecutive week, reflecting the prevailing bearish sentiment. This prolonged period of weakness underscores the challenges facing the Euro in the current market environment.