EUR/USD Price Analysis – Dec 25, 2024
Daily Price Outlook
The EUR/USD currency pair is currently trading at 1.03912, reflecting a slight decline of 0.13%. This downward movement comes as the US Dollar (USD) continues to exert pressure on the Euro, with market volatility subdued due to the holiday season.
The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is hovering just above the key 108.00 level, maintaining a steady range.
As traders prepare for a quiet market in the coming days, the broader outlook for the USD remains firmly positive, supported by the Federal Reserve's monetary policies and expectations of fewer interest rate cuts in 2025.
US Dollar Outlook: Fed's Slower Rate Cuts Boost Dollar
The Federal Reserve's recent guidance has significantly influenced the USD's strength. The central bank has indicated that it will slow the pace of interest rate cuts in 2025, with only two rate reductions planned, down from the previous projection of four.
As the Fed seeks to balance inflation control with economic growth, analysts, including those at UBS, predict that the Fed will deliver two 25-basis point cuts in the middle of the year.
The more gradual easing is due to persistently high inflation and a labor market that has shown more resilience than expected. This dovish approach has strengthened the US Dollar, which remains firm even as the global economic landscape shows signs of slowing.
EUR/USD: ECB's Dovish Stance Keeps Euro Under Pressure
The Euro continues to face headwinds, primarily due to the European Central Bank's (ECB) cautious stance on inflation and growth. ECB President Christine Lagarde recently indicated that the bank is nearing its inflation target of 2%, but warned that the services sector remains a point of concern.
With Eurozone inflation easing to 2.2%, services inflation remains elevated at 3.9%. This has raised concerns about the pace of monetary tightening in the region. Traders are betting on potential rate cuts by the ECB, with expectations for a 25-basis point reduction in each of the next four policy meetings.
GOLD (XAU/USD) – Technical Analysis
The EUR/USD is trading at 1.03912, showing a slight decline of 0.13% as it continues to face downward pressure. The pair is holding just below the critical pivot point at 1.04042, with immediate resistance at 1.04480, followed by 1.04973 and 1.05649.
These resistance levels are key for any potential bullish reversal, but the current trend remains bearish as the price is unable to break above the pivot point.
On the downside, immediate support is found at 1.03430, with further support levels at 1.03033 and 1.02722. The 50-day Exponential Moving Average (EMA) at 1.03957 is in close proximity, adding to the consolidation near the current price.
The RSI is at 44, indicating bearish momentum, with no signs of oversold conditions yet, suggesting that the price could continue its downward trajectory if it fails to hold above the support levels.
The market remains cautious, with volatility driven by economic data and geopolitical events. If EUR/USD fails to break above 1.04042, further downside could lead to a retest of the lower support levels.
However, a break above the immediate resistance at 1.04480 could shift the market sentiment, but this seems unlikely unless there is a significant shift in the underlying fundamentals.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD remains under pressure, trading below the pivot point at 1.04042.
- Immediate resistance at 1.04480, with support at 1.03430.
- RSI at 44 signals bearish momentum, with no clear reversal yet.
The EUR/USD is trading at 1.03912, showing a slight decline of 0.13% as it continues to face downward pressure. The pair is holding just below the critical pivot point at 1.04042, with immediate resistance at 1.04480, followed by 1.04973 and 1.05649.
These resistance levels are key for any potential bullish reversal, but the current trend remains bearish as the price is unable to break above the pivot point.
On the downside, immediate support is found at 1.03430, with further support levels at 1.03033 and 1.02722. The 50-day Exponential Moving Average (EMA) at 1.03957 is in close proximity, adding to the consolidation near the current price.
The RSI is at 44, indicating bearish momentum, with no signs of oversold conditions yet, suggesting that the price could continue its downward trajectory if it fails to hold above the support levels.
The market remains cautious, with volatility driven by economic data and geopolitical events. If EUR/USD fails to break above 1.04042, further downside could lead to a retest of the lower support levels.
However, a break above the immediate resistance at 1.04480 could shift the market sentiment, but this seems unlikely unless there is a significant shift in the underlying fundamentals.
EUR/USD - Trade Ideas
Entry Price – Sell Limit 1.04041
Take Profit – 1.03412
Stop Loss – 1.04361
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$629/ -$320
Profit & Loss Per Mini Lot = +$62/ -$32
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance: $1.04799; Next: $1.05318, $1.05677.
- Immediate Support: $1.03865; Further levels: $1.03430, $1.03033.
- RSI at 57 and 50 EMA at $1.04313 suggest neutral momentum.
EUR/USD is trading at $1.04331, marginally up 0.04%, showing consolidation below the $1.04455 pivot point.
The immediate resistance is seen at $1.04799, with additional hurdles at $1.05318 and $1.05677, which align with Fibonacci retracement levels, suggesting potential for a short-term rally if these levels are breached.
On the downside, immediate support lies at $1.03865, with further levels at $1.03430 and $1.03033 providing a robust safety net.
The RSI at 57 indicates neutral-to-bullish momentum, but the pair is struggling to gain traction above its 50 EMA at $1.04313, signaling a lack of decisive trend direction.
The broader trend remains bearish as long as EUR/USD trades below the $1.04799 pivot point. Sellers dominate the market, with price action reflecting caution amid lingering uncertainty in the Eurozone and USD dynamics.
A move below $1.04449 could accelerate declines toward the $1.03853 take-profit target, while a sustained break above $1.04799 would shift momentum to the upside.
Sell positions are favored below $1.04449, targeting $1.03853, with a stop-loss at $1.04927. Watch for a breakout above $1.04799 to reassess sentiment.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.04449
Take Profit – 1.03853
Stop Loss – 1.04927
Risk to Reward – 1: 1.25
Profit & Loss Per Standard Lot = +$596/ -$478
Profit & Loss Per Mini Lot = +$59/ -$47
EUR/USD Price Analysis – Dec 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend, struggling to break above Friday’s high of 1.0445. The pair remained under pressure, trading around the 1.0398 level and hitting an intraday low of 1.0387.
Meanwhile, the shared currency faced challenges after European Central Bank (ECB) President Christine Lagarde expressed confidence in the ongoing progress of reducing inflation during an interview with the Financial Times.
Her remarks suggested the ECB might not need to take an aggressive stance on tightening monetary policy, which weighed on the Euro’s performance.
Apart from this, the EUR/USD pair is expected to trade in a limited range this week due to low trading activity in a holiday-shortened period.
With Christmas Eve and Boxing Day falling midweek, thin market volumes have kept the currency pair constrained.
Traders remain cautious, as the holiday season often limits volatility and market opportunities.
EUR/USD Struggles as ECB's Rate Cuts and Inflation Outlook Weigh on Euro
On the EUR front, the currency pair is struggling as the euro continues to underperform. European Central Bank (ECB) President Christine Lagarde expressed confidence in reducing inflation, stating that the ECB is close to reaching its target of a 2% inflation rate.
She mentioned in an interview with the Financial Times that they are nearly at a point where they can declare inflation under control. However, the euro’s weakness is still visible as the market reacts to this cautious optimism.
The ECB has already reduced its Deposit Facility rate by 100 basis points this year and is expected to cut it by another 100 basis points next year.
This is largely due to concerns over the Eurozone's economic risks and the need to keep inflation in check.
Most ECB officials are aligned with the market's expectations for gradual rate cuts until inflation hits the 2% target, which they see as a neutral rate to avoid the risks of inflation falling too low.
Meanwhile, the economic calendar remains light, with investors looking ahead to Tuesday’s US Durable Goods Orders data, which is expected to show a decline of 0.4% in November after a 0.3% rise in October.
US Dollar Steady Amid Slower PCE Growth and Uncertainty Over Fed Rate Cuts
On the US front, the broad-based US dollar is steady after a sharp drop on Friday due to slower-than-expected growth in the US Personal Consumption Expenditure (PCE) Price Index.
The US Dollar Index (DXY), which tracks the dollar against six major currencies, is hovering just below 108.00. Core PCE inflation, which the Federal Reserve (Fed) watches closely, rose by 2.8%, slightly below the expected 2.9%.
Both headline and core PCE inflation increased by 0.1% month-on-month, leading to some uncertainty about whether the Fed will continue with its plans for gradual rate cuts in 2025.
Fed officials are now expecting fewer interest rate cuts next year, mainly due to the slower progress in reducing inflation and uncertainties around President-elect Donald Trump's policies on immigration, trade, and taxes.
Cleveland Fed President Beth Hammack, who voted to leave interest rates unchanged, said she prefers to wait for more evidence that inflation is returning to the 2% target.
Meanwhile, Chicago Fed President Austan Goolsbee mentioned that the uncertainty surrounding Trump’s policies has led to a shift in expectations, projecting fewer rate cuts than initially expected. Monday’s economic calendar is light, but investors will focus on the US Durable Goods Orders data for November, which is expected to show a decline of 0.4%.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04331, marginally up 0.04%, showing consolidation below the $1.04455 pivot point.
The immediate resistance is seen at $1.04799, with additional hurdles at $1.05318 and $1.05677, which align with Fibonacci retracement levels, suggesting potential for a short-term rally if these levels are breached.
On the downside, immediate support lies at $1.03865, with further levels at $1.03430 and $1.03033 providing a robust safety net.
The RSI at 57 indicates neutral-to-bullish momentum, but the pair is struggling to gain traction above its 50 EMA at $1.04313, signaling a lack of decisive trend direction.
The broader trend remains bearish as long as EUR/USD trades below the $1.04799 pivot point. Sellers dominate the market, with price action reflecting caution amid lingering uncertainty in the Eurozone and USD dynamics.
A move below $1.04449 could accelerate declines toward the $1.03853 take-profit target, while a sustained break above $1.04799 would shift momentum to the upside.
Sell positions are favored below $1.04449, targeting $1.03853, with a stop-loss at $1.04927. Watch for a breakout above $1.04799 to reassess sentiment.
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EUR/USD Price Analysis – Dec 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend and gained some bullish momentum, reaching as high as 1.0398.
This recovery can be mainly attributed to two factors. First, the US Dollar (USD) had given up some of its earlier gains, though it remains strong due to factors like the Federal Reserve's hawkish outlook and the ongoing strength of the US economy.
On the other hand, the Euro (EUR) found support from a key development in Germany, where lawmakers approved tax reforms that will cut annual tax revenue by 14 billion euros.
This decision is expected to leave more money in the hands of German households, encouraging higher consumer spending.
As a result, this boost in demand is likely to help stimulate economic growth in the Eurozone. Moreover, increased spending could help keep inflation in check, reducing the risk of it falling below the European Central Bank’s (ECB) target of 2%.
Despite the temporary bounce, the EUR/USD pair remains cautious, still trading near its yearly lows around 1.0350, reflecting ongoing concerns about the strength of the US Dollar and the broader economic outlook. The pair’s direction remains uncertain as investors watch closely for further developments.
EUR/USD Temporary Support from German Tax Reforms and ECB's Cautious Rate Cut Stance
On the EUR front, EUR/USD gained some temporary support near its yearly low as the Euro strengthened after German lawmakers approved tax reforms. These reforms will reduce tax revenue by 14 billion euros, giving households more disposable income.
This extra money is expected to boost consumer demand and help stimulate economic growth in the Eurozone. Higher spending could also reduce the risk of inflation falling below the European Central Bank’s (ECB) 2% target, especially since Germany is the largest economy in the region.
Meanwhile, ECB policymaker Christodoulos Patsalides, who is also the Governor of the Central Bank of Cyprus, has reduced expectations for larger rate cuts to boost growth. He prefers smaller, gradual rate adjustments instead of big cuts.
Patsalides believes that bigger cuts would only be necessary if inflation remains well below the ECB’s target for a long period.
Right now, traders expect four interest rate cuts from the ECB by June 2025. So far, the ECB has already lowered its Deposit Facility rate four times by 100 basis points to 3% this year, which has helped support the Euro in the short term.
Therefore, the approval of tax reforms in Germany and the ECB's cautious stance on rate cuts provide temporary support for the Euro, helping EUR/USD recover slightly from yearly lows. However, ongoing USD strength and market expectations for ECB cuts limit significant gains.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate resistance stands at $1.04220; a breakout could target $1.04550.
- Support levels at $1.03151 and $1.02840 are crucial for downside protection.
- RSI at 42 hints at mild bearish momentum, while the 50 EMA at $1.04073 caps the upside.
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.03436
Take Profit – 1.04038
Stop Loss – 1.03157
Risk to Reward – 1: 2.1
Profit & Loss Per Standard Lot = +$602/ -$279
Profit & Loss Per Mini Lot = +$60/ -$27
EUR/USD Price Analysis – Dec 18, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained modest positive traction despite the bullish US dollar. It is currently trading at the 1.0494 level, hitting an intraday low of 1.0513.
However, the reason for this slight upward trend could be attributed to investor caution ahead of the Federal Reserve's key policy meeting, which is scheduled to conclude later today at 19:00 GMT.
Traders are waiting to see the outcome of the meeting, particularly the revised Summary of Economic Projections (SEP), or the "dot plot," which will reveal the Fed's latest economic outlook and its view on future interest rate hikes.
On the other hand, the Euro’s outlook remains bearish, with market participants expecting the European Central Bank (ECB) to raise rates to around 2% by mid-2025, which continues to weigh on the single currency. This cautious environment is keeping EUR/USD in a tight range.
US Dollar Steady as Investors Await Fed's Policy Decision and Future Guidance
On the US front, the broad-based US dollar is holding steady as investors wait for the outcome of the Federal Reserve’s (Fed) final policy meeting of the year, set to conclude at 19:00 GMT. The Fed is expected to release an updated version of the Summary of Economic Projections (SEP), also known as the dot plot.
Analysts at Bank of America (BofA) anticipate the Fed will reduce interest rates by 25 basis points (bps), bringing them down to the 4.25%-4.5% range. Market participants are fully expecting this 25 bps rate cut, according to the CME FedWatch tool.
Looking ahead, traders are closely watching Fed Chair Jerome Powell’s press conference for more details on future interest rate guidance. Analysts expect Powell to adopt a gradual approach to rate cuts and potentially signal a pause in January if economic data aligns with expectations.
EUR/USD Remains Sideways as ECB Faces Economic Risks and Inflation Concerns
On the EUR front, the shared currency outlook remains bearish, with investors expecting the European Central Bank (ECB) to move toward a neutral interest rate of around 2% by the first half of 2025.
Many traders believe the ECB will continue to lower interest rates at every meeting until June 2025, as officials are concerned about the growing economic risks in the Eurozone.
The ECB is also confident that inflation will return to its target of 2% next year, which could help stabilize the economy.
On Tuesday, ECB policymaker Olli Rehn, who is also the Governor of Finland's central bank, mentioned that inflation is stabilizing near the ECB’s target of 2%.
This sets the stage for further interest rate cuts. This uncertainty keeps traders on edge as they watch for further signals from the ECB in the coming months.
Therefore, the bearish outlook for the Euro, driven by expectations of continued ECB rate cuts, could weigh on the EUR/USD pair, potentially pushing it lower as investors anticipate a weaker Euro.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05019, up 0.11%, as modest bullish momentum develops within a largely neutral setup.
The key pivot point at $1.05480 acts as a critical level for price direction. Immediate resistance lies at $1.05914, with higher levels at $1.06294 offering potential targets if upward pressure strengthens.
On the downside, the pair finds support at $1.04856, with deeper levels at $1.04525 and $1.04204 acting as safety nets for buyers. The RSI at 48 indicates neutral momentum, suggesting the pair is in a consolidation phase with room for directional moves depending on the breakout.
The 50 EMA at $1.05205 is slightly above the current price, reinforcing a cautious upward bias. A break above the pivot point could signal bullish continuation toward $1.05914, while a failure to sustain above the $1.04856 support level may shift sentiment bearish.
Traders are positioning for a Buy Limit at $1.04860, targeting the pivot point at $1.05481, with a stop loss at $1.04522 to manage downside risk.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD trades near $1.05019; RSI at 48 indicates neutral momentum.
- Immediate resistance lies at $1.05914, with support at $1.04856.
- Buy limit at $1.04860 targets $1.05481, with a stop loss at $1.04522.
The EUR/USD pair is trading at $1.05019, up 0.11%, as modest bullish momentum develops within a largely neutral setup.
The key pivot point at $1.05480 acts as a critical level for price direction. Immediate resistance lies at $1.05914, with higher levels at $1.06294 offering potential targets if upward pressure strengthens.
On the downside, the pair finds support at $1.04856, with deeper levels at $1.04525 and $1.04204 acting as safety nets for buyers. The RSI at 48 indicates neutral momentum, suggesting the pair is in a consolidation phase with room for directional moves depending on the breakout.
The 50 EMA at $1.05205 is slightly above the current price, reinforcing a cautious upward bias. A break above the pivot point could signal bullish continuation toward $1.05914, while a failure to sustain above the $1.04856 support level may shift sentiment bearish.
Traders are positioning for a Buy Limit at $1.04860, targeting the pivot point at $1.05481, with a stop loss at $1.04522 to manage downside risk.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.04860
Take Profit – 1.05481
Stop Loss – 1.04522
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$621/ -$338
Profit & Loss Per Mini Lot = +$62/ -$33
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance: $1.05480; Next Levels: $1.05914 and $1.06294.
- Support Levels: $1.04525; Further Supports: $1.04204 and $1.03858.
- Indicators: RSI at 54 signals neutral momentum; 50 EMA at $1.05031 supports the uptrend.
The EUR/USD pair is trading at $1.05188, up 0.19%, as the pair extends its recovery above the pivot point of $1.05032. The immediate resistance level lies at $1.05480, a critical threshold for short-term buyers.
A break above this level could see the euro challenging higher resistance at $1.05914 and potentially $1.06294, driven by renewed bullish momentum and improving sentiment.
On the downside, immediate support is at $1.04525, followed by stronger safety nets at $1.04204 and $1.03858. The pair remains supported near the 50 EMA at $1.05031, highlighting stability around the pivot zone.
Traders should watch this level closely, as a sustained position above it suggests further upside potential, while a breach below could shift focus to the support zones.
The Relative Strength Index (RSI) stands at 54, reflecting neutral momentum and signaling room for further gains if buyers take control.
A cautious bullish tone persists as long as the EUR/USD pair holds above the pivot point. The buy limit entry near $1.05037, targeting $1.05491, aligns well with the current technical structure, with a stop loss placed at $1.04699 for risk management.
In conclusion, while market conditions remain delicate, the EUR/USD appears poised for upward movement above $1.05032, with near-term targets pointing to $1.05480 and beyond.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.05037
Take Profit – 1.05491
Stop Loss – 1.04699
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$454/ -$338
Profit & Loss Per Mini Lot = +$45/ -$33
EUR/USD Price Analysis – Dec 16, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to maintain its gains, slipping back below the key 1.0500 level. The pair fell to an intraday low of 1.0484, reflecting ongoing pressure.
The main factor behind this decline was the dovish stance of the European Central Bank (ECB). ECB President Christine Lagarde, along with several other policymakers, expressed support for further rate cuts and a gradual move towards a neutral rate around 2%.
Meanwhile, the US Dollar staged a rebound, pushing the US Dollar Index (DXY) close to the important 107.00 level.
This renewed strength in the Greenback, combined with uncertainty surrounding the Federal Reserve’s upcoming interest rate decision on Wednesday, kept the USD volatile, contributing to the EUR/USD’s downward pressure.
ECB Signals Further Rate Cuts and Mixed Economic Data Weigh on EUR/USD
On the EUR front, the European Central Bank (ECB) is signaling further policy easing. ECB President Christine Lagarde mentioned that they may cut interest rates more if the data shows that inflation is slowing down.
She also noted that inflation in services has dropped sharply. Additionally, ECB Vice President Luis de Guindos agreed that the bank would continue with its current approach for the time being, suggesting more rate cuts are likely.
Recently, the ECB reduced its Deposit Facility rate by 25 basis points to 3%, part of a total of 100 basis points in rate cuts this year.
With inflation in the Eurozone under control and concerns about economic risks, markets expect the ECB to cut rates by another 100 basis points by June 2025.
On the economic front, the latest data from the Eurozone showed some positive signs. The December Purchasing Managers' Index (PMI) was better than expected, rising to 49.5 from 48.3, suggesting that business activity in the region is slowing down less than before.
The Services PMI improved, expanding to 51.4, which was better than analysts predicted. However, the Manufacturing PMI remained in contraction at 45.2.
Meanwhile, the German and French PMIs also showed improvement, mainly due to better performance in the services sector, although they remained below the 50.0 threshold, signaling ongoing contraction.
In politics, French President Macron appointed Francois Bayrou as the new prime minister, replacing Michel Barnier, who lost a no-confidence vote.
Therefore, the ECB's signals for further rate cuts and the mixed economic data, including a slower pace of contraction in business activity, may put downward pressure on the EUR. This could lead to continued weakness in the EUR/USD pair, especially against a strong USD.
US Dollar Strength and Fed's Rate Cut Expectations Pressure EUR/USD
On the US front, the US Dollar (USD) has regained some strength, pushing the US Dollar Index (DXY) closer to the key resistance level of 107.00. This rebound has caused the EUR/USD pair to give up its earlier gains.
The USD is expected to stay volatile as investors await the Federal Reserve’s (Fed) interest rate decision on Wednesday. The Fed is widely expected to lower its key borrowing rates by 25 basis points, bringing them to 4.25%-4.50%.
Investors will closely examine the Fed’s Summary of Economic Projections, also known as the “dot plot,” which outlines where policymakers expect interest rates to go in the medium and long term.
However, the recent Bloomberg survey revealed that most economists expect the Fed’s outlook for 2025 to be less dovish, meaning they predict fewer interest rate cuts.
Economists anticipate the Fed will reduce rates three times next year, assuming progress in controlling inflation slows. However, there are growing concerns about inflation risks, especially with the potential impact of President-elect Donald Trump's policies, such as new tariffs and tax cuts.
Today, investors will also pay attention to the S&P Global PMI report for December, which will provide further insights into the US economy’s performance.
Therefore, the US Dollar's strength and expectations of a 25 basis point rate cut by the Fed could pressure the EUR/USD pair, especially if the Fed's outlook signals fewer rate cuts in 2025. The pair may face further downward pressure as a result.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05188, up 0.19%, as the pair extends its recovery above the pivot point of $1.05032. The immediate resistance level lies at $1.05480, a critical threshold for short-term buyers.
A break above this level could see the euro challenging higher resistance at $1.05914 and potentially $1.06294, driven by renewed bullish momentum and improving sentiment.
On the downside, immediate support is at $1.04525, followed by stronger safety nets at $1.04204 and $1.03858. The pair remains supported near the 50 EMA at $1.05031, highlighting stability around the pivot zone.
Traders should watch this level closely, as a sustained position above it suggests further upside potential, while a breach below could shift focus to the support zones.
The Relative Strength Index (RSI) stands at 54, reflecting neutral momentum and signaling room for further gains if buyers take control.
A cautious bullish tone persists as long as the EUR/USD pair holds above the pivot point. The buy limit entry near $1.05037, targeting $1.05491, aligns well with the current technical structure, with a stop loss placed at $1.04699 for risk management.
In conclusion, while market conditions remain delicate, the EUR/USD appears poised for upward movement above $1.05032, with near-term targets pointing to $1.05480 and beyond.
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