Published: 5 December 2025,07:13
Daily Market Analysis New
*The ECB’s steady stance contrasts with increasingly hawkish pivots from the BoJ, RBA, RBNZ, and BoE, creating persistent headwinds for the euro.
*Slight gains versus USD but underperformance against other G7 currencies underscores the widening rate differential story.
*Today’s eurozone GDP data is the key catalyst — a strong print may offer temporary support, while weakness risks further downside.
The euro is exhibiting modest gains against the U.S. dollar but trades softly against most other G7 peers, reflecting a challenging environment shaped by growing monetary policy divergence. The European Central Bank currently maintains one of the most stable policy stances among major central banks, with inflation hovering near its 2% target and a deposit facility rate of 2%. With both labor market conditions and economic growth at satisfactory levels, the ECB has signaled no imminent need to adjust rates.
However, the euro is facing relative pressure as other major central banks pivot toward more hawkish narratives. The Bank of Japan is expected to raise rates this month, while the Reserve Bank of Australia and Reserve Bank of New Zealand have signaled an end to their easing cycles contingent on inflation progress. Concurrently, the Bank of England remains constrained by persistent domestic inflation, preventing any move toward rate cuts. This collective shift is likely to widen the interest rate differential between the ECB and its peers, creating a persistent headwind for the single currency.
In today’s session, market focus turns to the eurozone GDP reading for potential near-term direction. A robust growth figure exceeding 1.5% could provide the euro with a catalyst for a broader recovery, reinforcing the narrative of regional economic resilience. Conversely, a softer print may exacerbate the currency’s underperformance amid the prevailing global monetary policy divergence.
The EURGBP pair has confirmed a shift to a bearish near-term trajectory, having established a clear pattern of lower highs following its retreat from the highest level since last May. The pair has decisively breached the key liquidity support at the 0.8755 level and is now testing the immediate support at 0.8730. A sustained break below this level would constitute a solid bearish signal, likely triggering an acceleration of the downtrend.
Momentum indicators are aligning with the deteriorating price structure. The Relative Strength Index (RSI) is poised to enter oversold territory, reflecting intensifying selling pressure. Simultaneously, the Moving Average Convergence Divergence (MACD) is trending lower and exhibiting bearish divergence, confirming that downward momentum is gaining strength.
The convergence of the breakdown below the 0.8755 level and the bearish momentum signals presents a compelling technical case for further weakness. A confirmed daily close below 0.8730 would open a path toward the next significant support zone, with the 0.8680 area representing the initial target. The former support at 0.8755 now becomes the first level of resistance for any potential counter-trend rebounds.
Resistance Levels: 0.8840, 0.8955
Support Levels: 0.8610, 0.8515
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