EUR/USD Price Analysis – Nov 20, 2024
Daily Price Outlook
During Wednesday’s European session, the EUR/USD currency pair continued its downward trend, dropping to around 1.0555 level. However, the pair weakens as the US dollar gained strength, supported by expectations of fewer interest rate cuts from the Federal Reserve (Fed) in its ongoing policy-easing cycle.
Moreover, the EUR/USD losses accelerated further amid growing negative sentiment towards the Eurozone, driven by ongoing geopolitical tensions, a weakening economic outlook, and political uncertainty in Germany.
US Dollar Strengthens Amid Slower Fed Rate Cuts and Geopolitical Tensions, Pressuring EUR/USD
On the US front, the broad-based US dollar strengthened as expectations grow that the Federal Reserve (Fed) will cut interest rates more slowly. Experts predict a rebound in US inflation and faster economic growth, especially with President-elect Donald Trump's victory.
Trump’s plans to raise import tariffs by 10% and lower taxes could limit the Fed’s ability to make deeper rate cuts. For December, the Fed is likely to cut rates by 25 basis points, bringing them to the 4.25%-4.50% range, though this decision is still uncertain, according to analysts at Deutsche Bank.
Moreover, the Greenback gained further traction after Russian President Putin's approval to revise nuclear doctrine in response to the US's approval of long-range missiles for Ukraine. This boosted demand for the USD as a safe haven. However, safe-haven demand weakened after Russian Foreign Minister Sergei Lavrov stated that Russia would avoid nuclear war if possible.
Therefore, the bullish US Dollar, driven by expectations of slower Fed rate cuts and geopolitical tensions, puts pressure on the EUR/USD pair. As the USD gains, the EUR/USD continues to weaken, reflecting negative sentiment towards the Eurozone and broader market uncertainty.
EUR/USD Struggles Amid Weak Eurozone Outlook and ECB Policy Focus on Growth
On the EUR front, the losses in the EUR/USD pair bolstered further by negative sentiment surrounding the Eurozone weighed on the currency. However, the geopolitical tensions, weak economic outlook, and uncertainty in German politics contributed to the Euro’s struggle. European Central Bank (ECB) officials are more focused on supporting growth than controlling inflation.
ECB policymaker Fabio Panetta stated that since inflation is close to the target and domestic demand is weak, there is no need for strict monetary policies. He also warned that if the economy doesn't improve, inflation could stay below the ECB’s target.
Looking ahead, the ECB is expected to cut its Deposit Facility Rate by 25 basis points to 3% in its December meeting. This would be the fourth interest rate cut this year and the third consecutive one.
In addition, recent data showed that Eurozone wage growth, measured by Negotiated Wage Rates, increased to 5.42% in Q3, up from 3.54% in the previous quarter.
This wage growth could help boost consumer spending, but it also highlights ongoing challenges in the Eurozone economy. As a result, the EUR continues to face pressure, limiting its recovery against the USD.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.05874, down 0.06%, with bearish sentiment as the pair holds below the pivot point at $1.06083. Immediate resistance is positioned at $1.06367, with further resistance levels at $1.06620 and $1.06874, marking potential reversal zones for a bullish recovery.
The 50-day EMA at $1.05623 aligns closely with immediate support at $1.05472, forming a key short-term floor. Deeper support levels include $1.05176 and $1.04867, providing targets for sellers if the bearish trend persists.
The Relative Strength Index (RSI) is at 52, reflecting neutral momentum with no clear overbought or oversold signals. The pair is trading above the 50-day EMA, suggesting slight underlying bullish strength, but failure to break above $1.06083 could trigger a retreat.
Traders should watch the $1.05793 pivot closely—staying above this level favors bullish strategies, while a sustained break below $1.05472 would open the door for deeper corrections.
For now, a buy position above $1.05793 is recommended, targeting $1.06254 with a stop loss at $1.05565. However, sustained resistance at $1.06083 could limit gains, keeping the pair in a tight trading range.
EUR/USD remains range-bound below $1.06083, with opportunities for buying above $1.05793. However, failure to clear resistance levels could prompt further selling toward $1.05176.
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