EUR/USD Price Analysis – Nov 06, 2024
Daily Price Outlook
During Wednesday’s European session, the EUR/USD currency pair struggled to recover and remained under pressure around the 1.0750 mark, hitting an intraday low of 1.0703.
The pair took a significant hit as Republican candidate Donald Trump claimed victory in the 2024 U.S.presidential election, with Republicans expected to gain control of both the Senate and the House. This development triggered a surge in the U.S. Dollar, driving a wave of selling pressure on the Euro.
On the flip side, the Euro’s outlook has weakened as markets anticipate that Trump’s proposed protectionist policies could weigh heavily on European economic growth. Consequently, the Euro depreciated not only against the Dollar but also against other major currencies, reflecting broad concerns about the impact of U.S. policy shifts on the European economy.
US Dollar Strengthens Amid Trump’s Victory, Putting Pressure on EUR/USD
On the US front, the US dollar has been flashing green and gained strong bullish traction as Donald Trump claimed victory in the 2024 presidential election. While the result is not officially confirmed, Trump declared himself the winner, having won key battleground states like North Carolina, Georgia, and Pennsylvania. Fox News has already called him the winner over Democrat Kamala Harris.
As a result, the US dollar surged, reaching its highest level in nearly four months, with Treasury yields rising alongside it. Meanwhile, traders are awaiting the Federal Reserve’s decision on interest rates, with expectations of a 25 basis point rate cut on Thursday.
Therefore, the strength of the US dollar, fueled by Trump’s victory and Republican control, is putting pressure on the EUR/USD pair, adding to the bearish trend for the Euro against the greenback.
EUR/USD Faces Strong Selling Pressure Amid Trump’s Tariffs and ECB Rate Cut Expectations
On the other hand, the shared currency weakened as the US Dollar outperformed and the Euro (EUR) saw a sharp decline against other major currencies. The outlook for the Euro has become more negative, as market participants worry that Trump’s protectionist policies, such as tariffs, could severely hurt European economic growth.
According to a Dutch bank, Trump's tariffs could reduce European growth by 1.5 percentage points, which could result in an economic loss of around €260 billion based on Europe’s 2024 GDP of €17.4 trillion.
If Europe’s economy slows down because of Trump’s tariffs, the European Central Bank (ECB) may need to act quickly, possibly cutting interest rates to near zero by 2025. Euronews reports that Trump’s victory could push the ECB to make a larger-than-usual rate cut of 50 basis points in its next meeting in December.
This would be the fourth interest rate cut by the ECB this year, as they try to support the Eurozone economy. These factors are putting strong selling pressure on the EUR/USD pair, further weakening the Euro against the US Dollar.
Therefore, the negative outlook for the Euro, driven by concerns over Trump’s tariffs and potential ECB rate cuts, is putting significant pressure on the EUR/USD pair. This has led to further weakening of the Euro against the stronger US Dollar, intensifying the bearish trend.
EUR/USD – Technical Analysis
EUR/USD has dropped to $1.07183, shedding nearly 2% as the pair struggles to find support amidst continued dollar strength. The sharp decline in the euro signals bearish momentum, with immediate support now positioned at $1.06791.
Should this level fail to hold, the next critical support zones lie at $1.06375 and potentially lower, putting additional downside pressure on the euro. The pair faces resistance at $1.07760, with further resistance levels at $1.08108 and $1.08558. A push above these levels would be needed to shift momentum back in favor of the euro.
Technical indicators confirm the bearish outlook, with the RSI hovering at an oversold level of 24, suggesting intense selling pressure. While an oversold RSI could hint at a potential short-term bounce, the broader trend remains downward. The 50-day EMA, currently at $1.08728, sits well above the current price, reinforcing the bearish bias and indicating that any upside attempt may be limited.
Given the strong dollar environment, traders might consider selling positions below the pivot point at $1.07767, with a target take-profit level around $1.06941 and a stop loss near $1.08204. If EUR/USD remains under $1.07760, sellers are likely to stay in control, pushing the pair lower towards key support levels.
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