EUR/USD continued its bearish trajectory Thursday, consolidating losses near a 23-month low as fundamental and technical drivers pointed to further downside risks. Rising energy prices in Europe, particularly Dutch and British wholesale gas, exacerbated concerns about the strain on household and business finances. The potential increase in U.S. gas imports as a cheaper alternative may also weigh on EUR/USD, given its impact on trade balances. Meanwhile, the ECB’s Financial Stability Review highlighted rising sovereign debt concerns in key euro area economies, with widening bond spreads in countries like Italy, Spain, and France further undermining sentiment.
Technically, EUR/USD completed a bearish flag continuation pattern, signaling further losses. The pair remains below its 5-day moving average, reinforcing the downward bias. Falling RSI indicators and the breach of the Nov. 14 low at 1.0462 suggest momentum favors bears. Immediate support lies near the long-term level at 1.0450, with a break below likely to trigger stop-loss selling and potentially bring parity into focus. Resistance at 1.0545, marked by Thursday’s intraday highs, needs to be reclaimed to mitigate immediate bearish risks.
Looking ahead, euro area November PMIs and German Q3 GDP on Friday could determine the next directional move for EUR/USD. Weak economic data from the euro zone would increase the likelihood of further declines, especially as uncertainty surrounding energy prices and sovereign debt concerns persists. Conversely, better-than-expected results could provide a temporary reprieve, but the broader bearish structure remains intact.