EURUSD, Dow Forecast: On Edge Ahead of Key US Data

Key Events

ISM Manufacturing PMI remains below 50, highlighting 2025 tariff uncertainty
JOLTS Job Openings rebound from 2-year lows
DXY holds above key support ahead of key US economic data
Friday’s NFP results and Fed rate expectations
Technical Analysis: DXY, EURUSD, and Dow Jones.

US Economic Data and Dollar Risks for 2025

The first week of December highlights a cautious outlook for 2025, as ISM Manufacturing PMI—a leading economic growth indicator—remains below the 50-mark for the 8th consecutive month. While economic stimuli and tax benefits continue to drive US indices to record highs, tariff risks for 2025 are on the rise, posing challenges for the cooling inflation narrative and the currency market.

With heightened volatility expected from ISM Services PMI, Powell’s comments, and NFP data, the DXY sits at critical support, and US indices hover at historic highs. If the DXY breaches the 108 level, the EURUSD could face significant downside pressure, potentially falling toward parity and below.

Technical Analysis: Quantifying Uncertainties

DXY Forecast: Monthly Time Frame – Log Scale

Source: Tradingview

The DXY's 16-year primary uptrend and channel reflects persistent upside risks:

Upside Potential: A firm close above the 108 level could push the DXY toward 110.30, 113.60, 116.80, and 120.20, reaching the upper channel boundary.

Downside Risks: Failure to hold above the mid-channel resistance and 108 level could see the Dollar decline toward the channel’s lower boundary, with key support between 99.60, 96 and 94.

EURUSD Forecast: Monthly Time Frame – Log Scale

Source: Tradingview

The EURUSD exhibits a clear bearish trend, consolidating just below the resistance of its primary downtrend and channel since 2008

Upside Potential: From a long-term perspective, a sustained break above 1.13 could see the Euro target 1.2.

Downside Risks: A drop below 1.033 increases the likelihood of parity, with further downside toward 0.98.

Short-Term Outlook:

Resistance levels at 1.06, 1.07, and 1.0780 are crucial before the pair can extend toward 1.0950 and 1.13.

Dow Forecast: Weekly Time Frame - Log Scale

Source: Tradingview

The Dow’s uptrend has potentially paused at the previously highlighted 45,000 resistance, as discussed in my article "Dow Jones Forecast: Intensifying Uptrend, Where's the Next Resistance?" Looking ahead:

• Upside Potential: A decisive close above 45,200 could propel the Dow toward the 47,000 mark.

• Downside Risks: A pullback below 45,000 may lead to retests of support levels at 43,300, 42,300, and 41,500, aligning with the uptrend support line connecting consecutive lows since 2020.

--- Written by Razan Hilal, CMT on X: @RH_waves

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.