EURUSD in Focus: Political Turmoil and Key Data Shape a Fragile Outlook

The EURUSD remains a focal point this week as the euro hovers near multi-year lows amidst mounting geopolitical and economic pressures. Key drivers include political uncertainty in France following the collapse of its government and broader concerns about eurozone stability. These factors have compounded bearish sentiment, pushing the euro closer to critical support levels. Meanwhile, a series of high-impact economic events, including US unemployment claims, nonfarm employment changes, and Canada’s employment data, are expected to influence market dynamics, with traders closely monitoring their potential impact on currency movements. Chart analysis reveals pivotal resistance and support levels, highlighting the euro’s vulnerable position in the current market environment.

Thursday 15:30 (GMT+2) – USA: Unemployment Claims (USD)
Friday 15:30 (GMT+2) – Canada: Employment Change (CAD)
Friday 15:30 (GMT+2) – USD: Nonfarm Employment Change (USD)

Since reaching a peak of 1.12130 on September 25, the euro has experienced notable depreciation against the US dollar (USD). This downward trajectory has been driven by a confluence of technical signals, underscoring sustained bearish momentum.
Key among these signals was the emergence of a Shooting Star candlestick reversal pattern, which highlighted a failure by buyers to sustain the prior uptrend, marking the onset of a decline. The bearish outlook was further reinforced as prices slipped below the 20-period and 50-period Exponential Moving Averages (EMAs), pivotal technical levels that confirmed weakening sentiment. A subsequent “Death Cross” pattern, where the 20-period EMA crossed below the 50-period EMA, added to the downside pressure.
Complementing these signals, the Momentum Oscillator and Relative Strength Index (RSI) also fell below critical thresholds—100 and 50, respectively—validating the bearish trend. Despite this, the EURUSD pair found support at 1.03319 on November 22, sparking a short-term recovery fueled by renewed bullish sentiment. However, momentum indicators remain below key levels, suggesting lingering caution.
A decisive break above the resistance level at 1.05962 would signal a potential reversal and pave the way for further upward movement, contingent on broader confirmation from price action and underlying fundamentals.

If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:
1.05962: The initial price target is identified at 1.05962, corresponding to the swing high marked on November 29.
1.07038: The second level of resistance is established at 1.07038, which aligns with the weekly resistance, R2, estimated using the standard Pivot Points methodology.
1.07603: The third price target is determined at 1.07603, representing the trough from October 23.
1.08753: An additional price objective is estimated at 1.08753, mirroring the 61.8% Fibonacci Retracement drawn from the high point, 1.12130, to the low point, 1.03319.

If sellers maintain control of the market, traders may focus on the following four key support levels:
1.04675: The initial support level is seen at 1.04675, aligning with the weekly support, S1, estimated using the standard Pivot Points methodology.
1.03319: The second support level is established at 1.03319, representing the swing low marked on November 22.
1.01686: The third downside target is 1.01686, corresponding to the 161.8% Fibonacci Extension drawn from the swing low, 1.03319, to the swing high, 1.05962.
0.99043: An additional downside target is observed at 0.99043, reflecting the 261.8% Fibonacci Extension drawn from the swing low, 1.03319, to the swing high, 1.05962.

The euro remains under pressure, trading near its two-year low at $1.0528, as political uncertainty in France escalates following the collapse of the French government after a no-confidence vote. This has raised concerns about the nation’s economic stability and its ability to address a significant budget deficit, further weighing on eurozone sentiment. European Central Bank (ECB) President Christine Lagarde highlighted downside risks to regional growth while markets anticipate substantial rate cuts from the ECB through 2025.

The EURUSD faces a critical juncture as political instability in France and broader eurozone concerns weigh heavily on the euro. While technical signals point to continued bearish momentum, the pair remains close to pivotal support levels, keeping traders cautious. Upcoming high-impact economic events, including US unemployment claims and nonfarm payroll data, are likely to add further volatility. A sustained break above key resistance or below critical support will provide clearer direction, but for now, the euro’s outlook remains clouded by both technical and fundamental challenges.