EUR/USD extends consolidation in Christmas week market lull

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EUR/USD extends consolidation in Christmas week market lull
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EUR/USD trades in a narrow range around 1.0400 in Friday’s European session amid thin trading as market participants stay on the sidelines due to the Christmas holiday.

EUR/USD oscillates around 1.0400 amid thin trading volume, while its broader outlook remains weak amid a firm US Dollar. The Greenback remains firm as the Fed is expected to deliver fewer interest rate cuts in 2025. Investors expect the ECB to reduce its Deposit Facility rate by a further 100 bps next year. US Initial Jobless Claims for the week ending Dec 20 surprisingly fell to 219K.

The outlook of the major currency pair remains bearish as the 20-day and 50-day Exponential Moving Averages at 1.0464 and 1.0588, respectively, are declining. The 14-day Relative Strength Index oscillates near 40.00. A downside momentum would trigger if it sustains below that level. Looking down, the asset could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.

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