EUR/USD Price Analysis – Nov 15, 2024
Daily Price Outlook
During the European trading session on Friday, the EUR/USD pair broke its five-day losing streak, gaining positive momentum around 1.0577. This rebound was likely driven by a pullback in the US Dollar (USD) following remarks from Fed Chair Jerome Powell.
Powell highlighted the "remarkably good" performance of the US economy, providing the Federal Reserve with the flexibility to gradually reduce interest rates.
Moreover, the European Commission's optimistic growth outlook for the Eurozone in 2025 and 2026, coupled with moderate inflation and improving budget forecasts, further supported the bullish sentiment for the EUR.
US Dollar Pullback and Its Impact on the EUR/USD Pair
On the US front, the broad-based US dollar has recently pulled back after reaching its yearly high. This decline is largely due to comments from Federal Reserve Chair Jerome Powell, who said the US economy is doing "remarkably good." As a result, the Fed has more flexibility to gradually lower interest rates, which has softened the dollar's strength.
Moreover, the recent economic data also supports this trend. The US Producer Price Index (PPI) rose 2.4% year-over-year in October, which was higher than the revised 1.9% increase in September and above the market expectation of 2.3%.
Meanwhile, the Core PPI, which excludes volatile food and energy prices, climbed 3.1%, slightly higher than the 3.0% forecast. This suggests inflationary pressures are still present but may not lead to aggressive Fed rate hikes.
The US Dollar Index (DXY), which tracks the dollar against six major currencies, has fallen from its yearly high of 107.06 on Thursday, now trading near 106.80. This pullback is seen as a result of a slowdown in "Trump trades," which had previously driven the dollar higher. The shift in the dollar's momentum is contributing to changes in market sentiment, affecting global currency dynamics.
Therefore, the pullback in the US dollar, fueled by Jerome Powell's comments and mixed economic data, could lead to a weaker dollar. This might benefit the EUR/USD pair, potentially boosting the euro as the dollar softens, making the euro more attractive.
Eurozone Economic Outlook and ECB Policy Impact on EUR/USD
On the EUR front, the European Commission’s quarterly report projects positive growth for the Eurozone in the next few years.
The economy is expected to grow by 0.8% in 2024, 1.3% in 2025, and 1.6% in 2026. Inflation is forecast to decrease slightly, from 2.4% in 2024 to 1.9% in 2026. The budget deficit is also expected to shrink gradually, from 3.0% in 2024 to 2.8% by 2026.
Germany, the largest economy in the Eurozone, is facing slower growth. While German GDP is expected to grow by 0.7% in 2025 (down from the previous 1.0% forecast), it is projected to rise to 1.3% in 2026, still under the Eurozone average.
This year, Germany’s economy is expected to contract by 0.1%, a shift from earlier forecasts of modest growth. This slower growth in Germany adds some caution to the overall Eurozone outlook.
The European Central Bank (ECB) has hinted at possible interest rate cuts in the future but remains cautious due to high wages and slow labor productivity. ECB officials emphasize that they need more data before making any decisions.
ECB board member Isabel Schnabel also stressed that interest rates should stay the main tool for policy changes.
Therefore, the European Commission’s positive growth outlook for the Eurozone and the ECB’s cautious stance on rate cuts could support the euro in the EUR/USD pair. However, Germany’s slower growth and external risks may limit significant euro gains against the dollar.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.05567, up 0.27%, as it edges closer to its pivot point at $1.05761, signaling cautious optimism among traders. With an RSI of 47, the pair remains below the neutral 50 level, reflecting subdued momentum. Immediate resistance sits at $1.06023, closely followed by the 50-day EMA at $1.05977.
This proximity suggests that a break above $1.05761 could encourage buyers, potentially pushing EUR/USD toward higher resistance at $1.06312, with a further target at $1.06628 if bullish momentum builds.
On the downside, immediate support is found at $1.05397, and a drop below this level could trigger further declines toward $1.05113, with an additional safety net at $1.04867.
The technical setup suggests a mild bullish sentiment if EUR/USD maintains its position above $1.05397, though a stronger rally requires a clear move past the pivot and resistance levels.
The entry strategy indicates a buy limit at $1.05391, with a target of $1.05771, capitalizing on upward potential near the pivot. However, the stop loss at $1.05119 serves as a safeguard against unexpected reversals, particularly if the pair loses traction near support.
Given the close alignment of key levels, EUR/USD’s outlook leans cautiously bullish, but traders should watch the 50-day EMA closely, as it may act as a pivotal resistance.
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