EUR/USD Price Analysis – Oct 28, 2024
Daily Price Outlook
The EUR/USD currency pair continued its upward trend, attracting strong bids around the 1.0820 level as the US dollar lost traction and dropped from an almost three-month high. However, the outlook for the US dollar remains strong amid risk-off market sentiment ahead of the US presidential election.
Meanwhile, the Euro is trading sideways ahead of a data-packed week, during which traders will receive key economic growth and inflation figures for both the US and the Eurozone.
Economic Outlook for the Eurozone and Its Impact on the EUR/USD Pair
On the EUR front, the shared currency is largely moving sideways as traders anticipate a busy week of economic data, including growth and inflation figures for both the United States and the Eurozone. These economic indicators are important because they often influence interest rate decisions.
In the Eurozone, investors are particularly focused on economic growth data, as inflation is expected to stay close to the European Central Bank's (ECB) target of 2%. Economists project the Eurozone economy will grow by 0.8% year-on-year, an increase from the 0.6% seen in the second quarter, with growth expected to hold steady at 0.2% compared to the previous quarter.
Germany, the largest economy in the Eurozone, is anticipated to see a decline of 0.3% in Q3, which could weigh on overall growth. In light of this, ECB policymaker and Bundesbank President Joachim Nagel highlighted the importance of implementing a growth package recently announced by the German government to support the economy.
He noted that while a significant 50-basis points interest rate cut might be considered in December, decisions will depend on several factors, including the US presidential election results and inflation data.
Therefore, the anticipated economic growth and inflation data in the Eurozone could lead to fluctuations in the EUR/USD pair. If growth exceeds expectations, it may strengthen the Euro, while weak German performance could weigh on the Euro, leading to volatility.
Impact of US Economic Outlook on the EUR/USD Pair
On the US front, the US dollar has dropped and showed mild bearish trend. Despite this decline, the outlook for the US Dollar remains strong as investors adopt a risk-averse stance with the US presidential election just a week away. Central bankers discussed the potential implications of a former President Donald Trump victory over current Vice President Kamala Harris during panels at the recent IMF meeting.
Many traders view this scenario positively for the US Dollar, as Trump has promised to increase tariffs by 10% on all countries except China, which would face even steeper tariffs of 60%.
In addition to election-related uncertainties, the US Dollar's direction will be influenced by a series of economic data releases this week. Market participants are particularly focused on the Job Openings and Labor Turnover Survey (JOLTS) and the Nonfarm Payrolls (NFP) data, as these will provide insights into job demand in the economy.
Plus, Q3 GDP data will help gauge the current health of the US economy, further influencing the dollar's value as traders seek cues for future market movements.
Therefore, the US Dollar's mild bearish trend and upcoming economic data releases may create volatility in the EUR/USD pair. If US data shows strong job demand or GDP growth, it could strengthen the dollar, potentially leading to a decline in the Euro's value.
EUR/USD – Technical Analysis
EUR/USD is experiencing bearish momentum, with the currency pair trading below its 50-day Exponential Moving Average (EMA) of $1.08085. The pivot level for today is at $1.07964, just above the current price. This positioning suggests that the pair is under selling pressure, with immediate resistance located at $1.08152, followed by stronger resistance at $1.08388 and $1.08655.
The Relative Strength Index (RSI) currently stands at 34, reflecting bearish momentum and indicating that the pair may still have room to the downside before reaching oversold conditions. A sustained move below the pivot and the 50 EMA could expose EUR/USD to immediate support at $1.07615, with additional downside targets at $1.07139 if selling pressure intensifies.
For traders considering short positions, an entry below $1.07957 could present a favorable opportunity, with a target set at $1.07613. A stop-loss placed slightly above the immediate resistance level at $1.08148 would help limit risk, ensuring a balanced risk-to-reward setup.
Overall, as the EUR/USD pair trades below its pivot and the 50 EMA, the outlook remains bearish. Market participants should monitor the pair’s reaction to the support at $1.07615 closely, as a break could accelerate further downside movement.
Conclusion: EUR/USD’s current positioning below the pivot and 50 EMA signals continued bearishness. Traders may consider short entries below $1.07957, targeting $1.07613, with a protective stop-loss near $1.08148.
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