EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance: $1.04799; Next: $1.05318, $1.05677.
- Immediate Support: $1.03865; Further levels: $1.03430, $1.03033.
- RSI at 57 and 50 EMA at $1.04313 suggest neutral momentum.
EUR/USD is trading at $1.04331, marginally up 0.04%, showing consolidation below the $1.04455 pivot point.
The immediate resistance is seen at $1.04799, with additional hurdles at $1.05318 and $1.05677, which align with Fibonacci retracement levels, suggesting potential for a short-term rally if these levels are breached.
On the downside, immediate support lies at $1.03865, with further levels at $1.03430 and $1.03033 providing a robust safety net.
The RSI at 57 indicates neutral-to-bullish momentum, but the pair is struggling to gain traction above its 50 EMA at $1.04313, signaling a lack of decisive trend direction.
The broader trend remains bearish as long as EUR/USD trades below the $1.04799 pivot point. Sellers dominate the market, with price action reflecting caution amid lingering uncertainty in the Eurozone and USD dynamics.
A move below $1.04449 could accelerate declines toward the $1.03853 take-profit target, while a sustained break above $1.04799 would shift momentum to the upside.
Sell positions are favored below $1.04449, targeting $1.03853, with a stop-loss at $1.04927. Watch for a breakout above $1.04799 to reassess sentiment.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.04449
Take Profit – 1.03853
Stop Loss – 1.04927
Risk to Reward – 1: 1.25
Profit & Loss Per Standard Lot = +$596/ -$478
Profit & Loss Per Mini Lot = +$59/ -$47
EUR/USD Price Analysis – Dec 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend and gained some bullish momentum, reaching as high as 1.0398.
This recovery can be mainly attributed to two factors. First, the US Dollar (USD) had given up some of its earlier gains, though it remains strong due to factors like the Federal Reserve's hawkish outlook and the ongoing strength of the US economy.
On the other hand, the Euro (EUR) found support from a key development in Germany, where lawmakers approved tax reforms that will cut annual tax revenue by 14 billion euros.
This decision is expected to leave more money in the hands of German households, encouraging higher consumer spending.
As a result, this boost in demand is likely to help stimulate economic growth in the Eurozone. Moreover, increased spending could help keep inflation in check, reducing the risk of it falling below the European Central Bank’s (ECB) target of 2%.
Despite the temporary bounce, the EUR/USD pair remains cautious, still trading near its yearly lows around 1.0350, reflecting ongoing concerns about the strength of the US Dollar and the broader economic outlook. The pair’s direction remains uncertain as investors watch closely for further developments.
EUR/USD Temporary Support from German Tax Reforms and ECB's Cautious Rate Cut Stance
On the EUR front, EUR/USD gained some temporary support near its yearly low as the Euro strengthened after German lawmakers approved tax reforms. These reforms will reduce tax revenue by 14 billion euros, giving households more disposable income.
This extra money is expected to boost consumer demand and help stimulate economic growth in the Eurozone. Higher spending could also reduce the risk of inflation falling below the European Central Bank’s (ECB) 2% target, especially since Germany is the largest economy in the region.
Meanwhile, ECB policymaker Christodoulos Patsalides, who is also the Governor of the Central Bank of Cyprus, has reduced expectations for larger rate cuts to boost growth. He prefers smaller, gradual rate adjustments instead of big cuts.
Patsalides believes that bigger cuts would only be necessary if inflation remains well below the ECB’s target for a long period.
Right now, traders expect four interest rate cuts from the ECB by June 2025. So far, the ECB has already lowered its Deposit Facility rate four times by 100 basis points to 3% this year, which has helped support the Euro in the short term.
Therefore, the approval of tax reforms in Germany and the ECB's cautious stance on rate cuts provide temporary support for the Euro, helping EUR/USD recover slightly from yearly lows. However, ongoing USD strength and market expectations for ECB cuts limit significant gains.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate resistance stands at $1.04220; a breakout could target $1.04550.
- Support levels at $1.03151 and $1.02840 are crucial for downside protection.
- RSI at 42 hints at mild bearish momentum, while the 50 EMA at $1.04073 caps the upside.
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.03436
Take Profit – 1.04038
Stop Loss – 1.03157
Risk to Reward – 1: 2.1
Profit & Loss Per Standard Lot = +$602/ -$279
Profit & Loss Per Mini Lot = +$60/ -$27
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD trades near $1.05019; RSI at 48 indicates neutral momentum.
- Immediate resistance lies at $1.05914, with support at $1.04856.
- Buy limit at $1.04860 targets $1.05481, with a stop loss at $1.04522.
The EUR/USD pair is trading at $1.05019, up 0.11%, as modest bullish momentum develops within a largely neutral setup.
The key pivot point at $1.05480 acts as a critical level for price direction. Immediate resistance lies at $1.05914, with higher levels at $1.06294 offering potential targets if upward pressure strengthens.
On the downside, the pair finds support at $1.04856, with deeper levels at $1.04525 and $1.04204 acting as safety nets for buyers. The RSI at 48 indicates neutral momentum, suggesting the pair is in a consolidation phase with room for directional moves depending on the breakout.
The 50 EMA at $1.05205 is slightly above the current price, reinforcing a cautious upward bias. A break above the pivot point could signal bullish continuation toward $1.05914, while a failure to sustain above the $1.04856 support level may shift sentiment bearish.
Traders are positioning for a Buy Limit at $1.04860, targeting the pivot point at $1.05481, with a stop loss at $1.04522 to manage downside risk.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.04860
Take Profit – 1.05481
Stop Loss – 1.04522
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$621/ -$338
Profit & Loss Per Mini Lot = +$62/ -$33
EUR/USD Price Analysis – Dec 18, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained modest positive traction despite the bullish US dollar. It is currently trading at the 1.0494 level, hitting an intraday low of 1.0513.
However, the reason for this slight upward trend could be attributed to investor caution ahead of the Federal Reserve's key policy meeting, which is scheduled to conclude later today at 19:00 GMT.
Traders are waiting to see the outcome of the meeting, particularly the revised Summary of Economic Projections (SEP), or the "dot plot," which will reveal the Fed's latest economic outlook and its view on future interest rate hikes.
On the other hand, the Euro’s outlook remains bearish, with market participants expecting the European Central Bank (ECB) to raise rates to around 2% by mid-2025, which continues to weigh on the single currency. This cautious environment is keeping EUR/USD in a tight range.
US Dollar Steady as Investors Await Fed's Policy Decision and Future Guidance
On the US front, the broad-based US dollar is holding steady as investors wait for the outcome of the Federal Reserve’s (Fed) final policy meeting of the year, set to conclude at 19:00 GMT. The Fed is expected to release an updated version of the Summary of Economic Projections (SEP), also known as the dot plot.
Analysts at Bank of America (BofA) anticipate the Fed will reduce interest rates by 25 basis points (bps), bringing them down to the 4.25%-4.5% range. Market participants are fully expecting this 25 bps rate cut, according to the CME FedWatch tool.
Looking ahead, traders are closely watching Fed Chair Jerome Powell’s press conference for more details on future interest rate guidance. Analysts expect Powell to adopt a gradual approach to rate cuts and potentially signal a pause in January if economic data aligns with expectations.
EUR/USD Remains Sideways as ECB Faces Economic Risks and Inflation Concerns
On the EUR front, the shared currency outlook remains bearish, with investors expecting the European Central Bank (ECB) to move toward a neutral interest rate of around 2% by the first half of 2025.
Many traders believe the ECB will continue to lower interest rates at every meeting until June 2025, as officials are concerned about the growing economic risks in the Eurozone.
The ECB is also confident that inflation will return to its target of 2% next year, which could help stabilize the economy.
On Tuesday, ECB policymaker Olli Rehn, who is also the Governor of Finland's central bank, mentioned that inflation is stabilizing near the ECB’s target of 2%.
This sets the stage for further interest rate cuts. This uncertainty keeps traders on edge as they watch for further signals from the ECB in the coming months.
Therefore, the bearish outlook for the Euro, driven by expectations of continued ECB rate cuts, could weigh on the EUR/USD pair, potentially pushing it lower as investors anticipate a weaker Euro.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05019, up 0.11%, as modest bullish momentum develops within a largely neutral setup.
The key pivot point at $1.05480 acts as a critical level for price direction. Immediate resistance lies at $1.05914, with higher levels at $1.06294 offering potential targets if upward pressure strengthens.
On the downside, the pair finds support at $1.04856, with deeper levels at $1.04525 and $1.04204 acting as safety nets for buyers. The RSI at 48 indicates neutral momentum, suggesting the pair is in a consolidation phase with room for directional moves depending on the breakout.
The 50 EMA at $1.05205 is slightly above the current price, reinforcing a cautious upward bias. A break above the pivot point could signal bullish continuation toward $1.05914, while a failure to sustain above the $1.04856 support level may shift sentiment bearish.
Traders are positioning for a Buy Limit at $1.04860, targeting the pivot point at $1.05481, with a stop loss at $1.04522 to manage downside risk.
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EUR/USD Price Analysis – Dec 16, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to maintain its gains, slipping back below the key 1.0500 level. The pair fell to an intraday low of 1.0484, reflecting ongoing pressure.
The main factor behind this decline was the dovish stance of the European Central Bank (ECB). ECB President Christine Lagarde, along with several other policymakers, expressed support for further rate cuts and a gradual move towards a neutral rate around 2%.
Meanwhile, the US Dollar staged a rebound, pushing the US Dollar Index (DXY) close to the important 107.00 level.
This renewed strength in the Greenback, combined with uncertainty surrounding the Federal Reserve’s upcoming interest rate decision on Wednesday, kept the USD volatile, contributing to the EUR/USD’s downward pressure.
ECB Signals Further Rate Cuts and Mixed Economic Data Weigh on EUR/USD
On the EUR front, the European Central Bank (ECB) is signaling further policy easing. ECB President Christine Lagarde mentioned that they may cut interest rates more if the data shows that inflation is slowing down.
She also noted that inflation in services has dropped sharply. Additionally, ECB Vice President Luis de Guindos agreed that the bank would continue with its current approach for the time being, suggesting more rate cuts are likely.
Recently, the ECB reduced its Deposit Facility rate by 25 basis points to 3%, part of a total of 100 basis points in rate cuts this year.
With inflation in the Eurozone under control and concerns about economic risks, markets expect the ECB to cut rates by another 100 basis points by June 2025.
On the economic front, the latest data from the Eurozone showed some positive signs. The December Purchasing Managers' Index (PMI) was better than expected, rising to 49.5 from 48.3, suggesting that business activity in the region is slowing down less than before.
The Services PMI improved, expanding to 51.4, which was better than analysts predicted. However, the Manufacturing PMI remained in contraction at 45.2.
Meanwhile, the German and French PMIs also showed improvement, mainly due to better performance in the services sector, although they remained below the 50.0 threshold, signaling ongoing contraction.
In politics, French President Macron appointed Francois Bayrou as the new prime minister, replacing Michel Barnier, who lost a no-confidence vote.
Therefore, the ECB's signals for further rate cuts and the mixed economic data, including a slower pace of contraction in business activity, may put downward pressure on the EUR. This could lead to continued weakness in the EUR/USD pair, especially against a strong USD.
US Dollar Strength and Fed's Rate Cut Expectations Pressure EUR/USD
On the US front, the US Dollar (USD) has regained some strength, pushing the US Dollar Index (DXY) closer to the key resistance level of 107.00. This rebound has caused the EUR/USD pair to give up its earlier gains.
The USD is expected to stay volatile as investors await the Federal Reserve’s (Fed) interest rate decision on Wednesday. The Fed is widely expected to lower its key borrowing rates by 25 basis points, bringing them to 4.25%-4.50%.
Investors will closely examine the Fed’s Summary of Economic Projections, also known as the “dot plot,” which outlines where policymakers expect interest rates to go in the medium and long term.
However, the recent Bloomberg survey revealed that most economists expect the Fed’s outlook for 2025 to be less dovish, meaning they predict fewer interest rate cuts.
Economists anticipate the Fed will reduce rates three times next year, assuming progress in controlling inflation slows. However, there are growing concerns about inflation risks, especially with the potential impact of President-elect Donald Trump's policies, such as new tariffs and tax cuts.
Today, investors will also pay attention to the S&P Global PMI report for December, which will provide further insights into the US economy’s performance.
Therefore, the US Dollar's strength and expectations of a 25 basis point rate cut by the Fed could pressure the EUR/USD pair, especially if the Fed's outlook signals fewer rate cuts in 2025. The pair may face further downward pressure as a result.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05188, up 0.19%, as the pair extends its recovery above the pivot point of $1.05032. The immediate resistance level lies at $1.05480, a critical threshold for short-term buyers.
A break above this level could see the euro challenging higher resistance at $1.05914 and potentially $1.06294, driven by renewed bullish momentum and improving sentiment.
On the downside, immediate support is at $1.04525, followed by stronger safety nets at $1.04204 and $1.03858. The pair remains supported near the 50 EMA at $1.05031, highlighting stability around the pivot zone.
Traders should watch this level closely, as a sustained position above it suggests further upside potential, while a breach below could shift focus to the support zones.
The Relative Strength Index (RSI) stands at 54, reflecting neutral momentum and signaling room for further gains if buyers take control.
A cautious bullish tone persists as long as the EUR/USD pair holds above the pivot point. The buy limit entry near $1.05037, targeting $1.05491, aligns well with the current technical structure, with a stop loss placed at $1.04699 for risk management.
In conclusion, while market conditions remain delicate, the EUR/USD appears poised for upward movement above $1.05032, with near-term targets pointing to $1.05480 and beyond.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance: $1.05480; Next Levels: $1.05914 and $1.06294.
- Support Levels: $1.04525; Further Supports: $1.04204 and $1.03858.
- Indicators: RSI at 54 signals neutral momentum; 50 EMA at $1.05031 supports the uptrend.
The EUR/USD pair is trading at $1.05188, up 0.19%, as the pair extends its recovery above the pivot point of $1.05032. The immediate resistance level lies at $1.05480, a critical threshold for short-term buyers.
A break above this level could see the euro challenging higher resistance at $1.05914 and potentially $1.06294, driven by renewed bullish momentum and improving sentiment.
On the downside, immediate support is at $1.04525, followed by stronger safety nets at $1.04204 and $1.03858. The pair remains supported near the 50 EMA at $1.05031, highlighting stability around the pivot zone.
Traders should watch this level closely, as a sustained position above it suggests further upside potential, while a breach below could shift focus to the support zones.
The Relative Strength Index (RSI) stands at 54, reflecting neutral momentum and signaling room for further gains if buyers take control.
A cautious bullish tone persists as long as the EUR/USD pair holds above the pivot point. The buy limit entry near $1.05037, targeting $1.05491, aligns well with the current technical structure, with a stop loss placed at $1.04699 for risk management.
In conclusion, while market conditions remain delicate, the EUR/USD appears poised for upward movement above $1.05032, with near-term targets pointing to $1.05480 and beyond.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.05037
Take Profit – 1.05491
Stop Loss – 1.04699
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$454/ -$338
Profit & Loss Per Mini Lot = +$45/ -$33
EUR/USD Price Analysis – Dec 13, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its bullish momentum, staying well-supported around the 1.0492 level and reaching an intra-day high of 1.0496. The upward rally can be attributed to the bearish US dollar, which reversed its earlier gains.
Despite strong expectations that the Federal Reserve (Fed) will adopt a slightly hawkish stance after cutting its key interest rates by 25 basis points (bps) to 4.25%-4.50% in Wednesday's policy meeting, the US dollar continued to lose ground.
Meanwhile, comments from European Central Bank (ECB) officials after the blackout period, signaling a dovish outlook on interest rates, failed to drag down the EUR/USD pair.
US Dollar Weakens Despite Hawkish Fed Expectations, Supporting EUR/USD
On the US front, the broad-based US dollar failed to extend its bullish trend and edged lower on the day as it faced selling pressure above the 107.00 level.
Despite strong expectations that the Federal Reserve (Fed) will maintain a slightly hawkish stance after cutting its key interest rates by 25 basis points (bps) to 4.25%-4.50% in the recent policy meeting, the Greenback continued to lose ground.
According to the CME FedWatch tool, traders have priced in a 25-bps rate cut for Wednesday but expect rates to remain unchanged at 4.25%-4.50% in the January policy meeting.
Analysts from Macquarie pointed out that the slowdown in US disinflation, a lower-than-expected unemployment rate, and strong US financial markets are contributing to the Fed's more hawkish outlook.
Adding to the hawkish sentiment, a faster-than-expected rise in the US Producer Price Index (PPI) data for November reinforced expectations of a more aggressive Fed stance.
The PPI report showed that both the annual headline and core PPI (excluding food and energy) increased by 3% and 3.4%, respectively.
Therefore, the US dollar's weakness and expectations of a more hawkish Fed stance have supported the EUR/USD pair, allowing it to remain bullish. The Greenback's decline, despite strong economic data, has helped the Euro maintain its strength against the dollar.
EUR/USD Resilient Despite Dovish ECB Outlook and Economic Concerns
On the EUR front, the shared currency continued to rise toward 1.0500, despite dovish remarks from European Central Bank (ECB) officials after the blackout period.
ECB policymakers, including Bank of France Governor François Villeroy de Galhau, Latvian central bank Governor Mārtiņš Kazāks, and Bank of Estonia Governor Madis Müller, have supported further interest rate cuts, which is generally negative for the Euro.
Furthermore, ECB President Christine Lagarde's comments on Thursday signaled that more rate cuts could be on the way.
The ECB recently reduced its Deposit Facility rate by 25 basis points to 3%, citing a weak Eurozone economic outlook.
Lagarde highlighted the slowdown in exports and weak business investment, suggesting the need for more policy easing.
She pointed out that manufacturing in the Eurozone is still contracting, and growth in services is slowing, while businesses are holding back on investments due to weak demand and an uncertain future.
Some ECB officials even supported a larger rate cut of 50 basis points, signaling concern over economic growth.
The ECB's new economic projections forecast the Eurozone economy to grow only 0.7% in 2024 and 1.1% in 2025, both lower than previously expected. Despite these concerns, the Euro remained resilient against the US dollar.
Despite dovish ECB comments and concerns over Eurozone growth, the EUR/USD pair remained resilient, supported by a weaker US dollar.
The Euro's strength continued as traders priced in the possibility of further rate cuts, but with limited bearish impact.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04554, down 0.11%, reflecting a bearish tone on the 4-hour chart. Prices hover below the pivot point at $1.04794, signaling sustained selling pressure.
Immediate resistance is at $1.05218, followed by $1.05622 and $1.05973. On the downside, support levels are positioned at $1.04270, with further barriers at $1.03987 and $1.03667, providing targets for bearish continuation.
The 50 EMA at $1.05172 confirms short-term downward momentum, with prices consistently trading below this level.
The RSI at 36 indicates bearish sentiment, nearing oversold territory, which may limit the scope for further immediate declines.
A Sell Limit entry at $1.04791 targets $1.04385, with a Stop Loss at $1.05104 to manage risk. A breach of $1.04270 would open the path to $1.03987, reinforcing the bearish trend.
Conversely, a recovery above $1.04794 could shift the tone, with resistance at $1.05218 acting as a key test for buyers.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Bearish Momentum: Prices remain below the $1.04794 pivot and the 50 EMA at $1.05172, reinforcing the bearish trend.
- Support Levels in Focus: A break below $1.04270 could extend declines toward $1.03987 and $1.03667.
- RSI Signals Weakness: RSI at 36 suggests bearish sentiment but indicates nearing oversold conditions.
EUR/USD is trading at $1.04554, down 0.11%, reflecting a bearish tone on the 4-hour chart. Prices hover below the pivot point at $1.04794, signaling sustained selling pressure.
Immediate resistance is at $1.05218, followed by $1.05622 and $1.05973. On the downside, support levels are positioned at $1.04270, with further barriers at $1.03987 and $1.03667, providing targets for bearish continuation.
The 50 EMA at $1.05172 confirms short-term downward momentum, with prices consistently trading below this level.
The RSI at 36 indicates bearish sentiment, nearing oversold territory, which may limit the scope for further immediate declines.
A Sell Limit entry at $1.04791 targets $1.04385, with a Stop Loss at $1.05104 to manage risk. A breach of $1.04270 would open the path to $1.03987, reinforcing the bearish trend.
Conversely, a recovery above $1.04794 could shift the tone, with resistance at $1.05218 acting as a key test for buyers.
EUR/USD - Trade Ideas
Entry Price – Sell Limit 1.04791
Take Profit – 1.04385
Stop Loss – 1.05104
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$406/ -$313
Profit & Loss Per Mini Lot = +$40/ -$31
EUR/USD Price Analysis – Dec 11, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair continued to struggle, unable to break its bearish bias and remained under pressure near the 1.0495 level, dipping to an intra-day low of 1.0487.
This downward trend can be largely attributed to a combination of factors including the growing expectation that the European Central Bank (ECB) will lower its Deposit Facility rate by 25 basis points to 3% in its policy meeting on Thursday.
This move is seen as a response to economic challenges in the Eurozone, making the Euro less attractive to investors.
On the other hand, the US Dollar is gaining strength, supported by strong anticipation of the US Consumer Price Index (CPI) data for November, set to be released later in the day.
This has contributed to the US Dollar's ongoing rally, marking its fourth consecutive day of gains. The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of other major currencies, rose above the 106.50 mark, adding further pressure on EUR/USD.
EUR/USD Weakened by ECB Rate Cut Expectations and Economic Concerns
On the EUR front, the major currency pair is weakening due to growing expectations that the European Central Bank (ECB) will cut its Deposit Facility rate by 25 basis points to 3% in its upcoming meeting on Thursday.
This would be the third consecutive rate cut and the fourth this year. Traders are anticipating this move as the ECB believes inflation is under control, but economic activity in the Eurozone is struggling.
Many ECB officials are also concerned that inflation might fall short of their target, partly due to possible tariffs from US President-elect Donald Trump and weak domestic demand.
As the market expects a rate cut, investors will pay close attention to ECB President Christine Lagarde’s comments after the decision.
Her words may provide hints about future interest rates. With political issues in Germany and France, along with concerns over Trump’s tariffs affecting European exports, Lagarde may take a more cautious approach. This uncertainty around the ECB’s actions is putting more pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05270, holding steady despite subdued momentum on the 4-hour chart. The pivot point at $1.05392 serves as a key level for determining near-term direction.
Immediate resistance is positioned at $1.05685, with further barriers at $1.05973 and $1.06321. On the downside, immediate support lies at $1.04978, with subsequent levels at $1.04602 and $1.04270.
Technical indicators highlight a cautious sentiment. The RSI is at 42, signaling weak momentum, while the 50 EMA at $1.05537 suggests a bearish bias as prices remain below this key moving average.
A break below $1.05384 could intensify selling pressure, exposing the pair to potential declines toward $1.04978. Conversely, a recovery above $1.05685 would shift sentiment, opening the path to test $1.05973.
For traders, the recommended strategy is to enter short positions below $1.05384, targeting $1.04978, with a stop-loss set at $1.05697. This setup aligns with the prevailing bearish trend while managing downside risk effectively.
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