EUR/USD Price Analysis – Oct 11, 2024
Daily Price Outlook
The EUR/USD pair maintained its upward trend, trading strongly around the 1.0950 level and reaching an intra-day high of 1.0955. This upward movement can be attributed to a bearish US dollar, which declined following disappointing economic data from the United States.
Initial jobless claims rose to 258,000, exceeding expectations and prompting speculation that the Federal Reserve may need to reconsider its rate cut plans.
This economic weakness puts downward pressure on the US dollar and supports gains in the EUR/USD pair. Despite expectations that the European Central Bank (ECB) may implement further interest rate cuts in its remaining monetary policy meetings this year, the euro continues to outperform.
Euro Resilience Amid ECB Rate Cut Expectations and Economic Concerns
On the EUR front, the euro is performing well, even as market participants anticipate that the European Central Bank (ECB) will cut interest rates further in its remaining meetings this year.
The ECB has already lowered its Deposit Facility Rate by 50 basis points (bps) to 3.5% this year and is expected to reduce it by another 50 bps.
Traders predict two rate cuts of 25 bps each, with one likely coming next week and another in December. Despite these anticipated cuts, the euro continues to show strength against the US dollar.
However, the dovish sentiment surrounding the ECB has increased due to a quicker-than-expected drop in inflation and concerns about economic growth.
ECB policymaker Yannis Stournaras recently stated that price pressures are easing faster than the ECB had predicted in September and supported two more rate cuts in the remaining meetings this year, with further reductions likely in 2025.
Moreover, revised estimates for Germany’s Harmonized Index of Consumer Prices (HICP) for September showed inflation at 1.8%, below the ECB’s target of 2%.
On the economic front, growth prospects in the Eurozone appear vulnerable, particularly as Germany is projected to end the year with a 0.2% decline in output.
Therefore, the anticipated ECB rate cuts may initially weaken the euro, but ongoing inflation declines and economic concerns in the Eurozone support the euro's strength against the US dollar.
This dynamic contributes to the EUR/USD pair's upward momentum despite rate cut expectations.
EUR/USD - Technical Analysis
The EUR/USD is trading at $1.09337, down 0.02% for the day, as the pair struggles to break through key resistance levels. The currency pair remains below its pivot point at $1.0942, suggesting that bearish momentum is still in play.
Immediate resistance is observed at $1.0955, followed by the 50-day Exponential Moving Average (EMA) at $1.0957, which has been capping the upside for the past week.
A clear break above $1.0955 could pave the way for EUR/USD to target the next resistance levels at $1.0967 and $1.0981.
On the downside, immediate support is seen at $1.0926, with further support levels at $1.0914 and $1.0900. A drop below $1.0926 could trigger additional selling pressure, pushing the pair toward the psychological $1.0900 mark.
The Relative Strength Index (RSI) is currently at 44, indicating neutral momentum and leaving room for further downside if the pair fails to reclaim $1.0942.
Given the current technical setup, a sustained move below $1.0942 may signal a bearish trend continuation, targeting lower support levels. Conversely, a breakout above the 50-day EMA at $1.0957 would shift the outlook to bullish, potentially driving the EUR/USD higher.
Overall, the EUR/USD outlook remains cautiously bearish below the pivot point of $1.0942, and traders should watch for a confirmed break above or below key levels to determine the pair’s next directional move.
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