EURUSD consolidates with bearish bias as Euro weakens

The EURUSD currency pair remains in a sideways trend, consolidating at Tuesday's levels amid low trading activity due to the New Year's Eve holidays.

Investors are assessing the outlook for US monetary policy, expecting a slowdown in the pace of interest rate cuts by the Federal Reserve (Fed) in 2025. At its last meeting, the Fed reduced its forecast for monetary easing to two rate cuts, instead of the four announced in September.

UBS forecasts that rate cuts of 25 basis points could occur in June and September 2025. Recent comments from Fed officials indicate a more balanced approach to reducing borrowing costs. This is due to stable inflation, positive indicators in the labor market and uncertainty around Donald Trump's economic policy.

Investors are waiting for the data on initial jobless claims in the United States published on Thursday. It is predicted that the figure will drop to 218 000 against the previous 220 000. These indicators may have a short-term impact on the dynamics of the currency pair.

The euro remains under pressure amid expectations of monetary policy easing by the European Central Bank (ECB) in 2025. Traders are putting a 25 basis points reduction in the deposit facility rate at each of the next four meetings of the bank into their forecasts.

At the technical level, EURUSD quotes on the daily chart (D1) are correcting in a narrow range after the impulse movement in November. The downtrend continues to be relevant.

In terms of wave analysis, the fifth downward wave is forming on the H6 timeframe. Breaking through the top of the third wave at 1.0330 will strengthen the movement towards sales. The MACD indicator (standard settings) remains in the negative zone, confirming the prevalence of bearish sentiment.

Signal:

The short-term outlook for EURUSD is to sell.

The target is at the level of 1.0150.

Part of the profit should be taken near the level of 1.0260.

A stop-loss could be placed at the level of 1.0555.

The bearish trend is short-term, so a trading volume should not exceed 2% of your balance.