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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