EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot point at $1.0848 remains critical for determining the next direction.
- The 50-day EMA at $1.0877 acts as a strong resistance level.
- RSI at 39 suggests mildly oversold conditions, but further downside remains possible.
The EUR/USD pair is trading slightly higher today, up 0.11% at $1.08375. The market is hovering below the key pivot point at $1.0848, which serves as a critical level for short-term direction. Immediate resistance is seen at $1.0868, followed by higher resistance levels at $1.0892 and $1.0916. A break above these levels could signal further bullish momentum for the euro against the dollar, with buyers targeting the next resistance zones.
On the downside, immediate support is at $1.0811, with further support levels at $1.0794 and $1.0779. A sustained move below these support areas could push EUR/USD into a deeper correction, where a more bearish outlook would prevail.
The 50-day Exponential Moving Average (EMA) at $1.0877 is acting as a resistance level, keeping the euro in check. Meanwhile, the Relative Strength Index (RSI) is currently at 39, indicating mildly oversold conditions but not yet signaling a significant reversal. Given this context, traders are likely watching for a potential breakdown below the pivot point to enter short positions.
A selling opportunity arises below $1.08488, with a take-profit target set at $1.07941. A stop loss should be placed at $1.08766 to manage risk, as a break above the 50-day EMA would invalidate the bearish setup.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.08488
Take Profit – 1.07941
Stop Loss – 1.08766
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$547/ -$278
Profit & Loss Per Mini Lot = +$54/ -$27
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD remains under pressure, trading below the pivot point of $1.0892, with potential for further declines.
- RSI at 35 signals approaching oversold territory, but still room for additional downside.
- The 50-period EMA at $1.0917 reinforces bearish sentiment, with the pair struggling to break higher.
EUR/USD is trading at $1.08798, down 0.09%, as the pair remains under mild bearish pressure. The price has dropped below the pivot point of $1.0892, indicating a continued downtrend.
Immediate resistance is seen at $1.0916, with further resistance levels at $1.0933 and $1.0952. On the downside, key support is located at $1.0866, followed by $1.0852 and $1.0837. If the pair breaks below these levels, further downside movement could follow.
The Relative Strength Index (RSI) is currently at 35, suggesting that while the pair is approaching oversold territory, there is still room for additional downward movement.
The 50-period Exponential Moving Average (EMA) at $1.0917 is acting as a dynamic resistance, reinforcing the bearish bias as long as the price stays below this level.
The overall trend appears bearish, with a potential for further declines if key support levels are breached.
Traders may consider entering short positions below $1.08922, with a target of $1.08570, and a stop loss at $1.09160 to protect against any upside reversal. The combination of the bearish trend and a low RSI suggests the possibility of continued weakness in the near term.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.08922
Take Profit – 1.08570
Stop Loss – 1.09160
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$352/ -$238
Profit & Loss Per Mini Lot = +$35/ -$23
EUR/USD Price Analysis – Oct 16, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair continued its downward trend, falling to around 1.0880. The Euro (EUR) is struggling amid growing expectations that the European Central Bank (ECB) will lower interest rates again on Thursday. This outlook has put significant pressure on the major currency pair.
At the same time, the US dollar has been on a strong upswing over the past few weeks, contributing to the Euro's decline. The US Dollar Index, which measures the Greenback against six major currencies, climbed to approximately 103.40. Traders are increasingly confident that the US Federal Reserve (Fed) will gradually reduce interest rates for the rest of the year, further bolstering the Dollar's strength.
EUR/USD Declines as ECB Rate Cut Expectations and Economic Concerns Weigh on the Euro
On the EUR front, the EUR/USD currency pair has dropped due to expectations that the European Central Bank (ECB) will cut interest rates again on Thursday. Analysts predict the ECB will lower its Rate on Deposit Facility by 25 basis points to 3.25%, marking the second consecutive rate cut. Investors are closely watching the monetary policy statement and ECB President Christine Lagarde’s press conference for insights into the future of interest rates.
Lagarde is likely to take a dovish stance, as inflation pressures in the Eurozone seem to be easing, while concerns about an economic slowdown are growing. Preliminary data shows that the Eurozone's Harmonized Index of Consumer Prices (HICP) fell to 1.8% in September.
Moreover, recent estimates for the Consumer Price Index (CPI) in France and Italy indicate lower-than-expected inflation. Compounding these concerns, speculation about former US President Donald Trump potentially winning the upcoming US presidential elections has raised worries about the EU’s export outlook. If Trump wins, tariffs on automotive imports to the US could increase, negatively impacting exports from Europe and further slowing economic growth.
Therefore, the anticipated rate cut by the ECB and easing inflation pressures are likely to weaken the Euro further, contributing to the EUR/USD pair's decline. In the meantime, concerns over potential tariffs from a Trump presidency could negatively affect EU exports, exacerbating Euro weakness.
US Dollar Strengthens as Fed Signals Gradual Rate Cuts and Retail Sales Data Looms
On the US front, the EUR/USD pair is facing pressure due to the strong performance of the US Dollar in recent weeks. The US Dollar Index (DXY), which measures the Greenback against six major currencies, has risen to nearly 103.40. The Dollar is gaining strength as traders expect the US Federal Reserve (Fed) to gradually lower interest rates for the rest of the year.
Analysts believe the Fed will shift from an "aggressive" to a "moderate" policy-easing approach, especially after strong Nonfarm Payrolls (NFP) data and the US Services Purchasing Managers Index (PMI) showed growth, along with rising price pressures in September.
However, Fed Governor Christopher Waller has warned against rushing into interest rate cuts. In a recent speech, he mentioned that while he anticipates gradual rate reductions over the next year, the labor market remains healthy even as demand for workers is slowing.
Looking ahead, the next important indicator for the US Dollar will be the Retail Sales data for September, set to be released on Thursday. Economists predict a 0.3% increase in Retail Sales after a modest rise of 0.1% in August, which could further influence the Dollar's trajectory.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.08798, down 0.09%, as the pair remains under mild bearish pressure. The price has dropped below the pivot point of $1.0892, indicating a continued downtrend.
Immediate resistance is seen at $1.0916, with further resistance levels at $1.0933 and $1.0952. On the downside, key support is located at $1.0866, followed by $1.0852 and $1.0837. If the pair breaks below these levels, further downside movement could follow.
The Relative Strength Index (RSI) is currently at 35, suggesting that while the pair is approaching oversold territory, there is still room for additional downward movement.
The 50-period Exponential Moving Average (EMA) at $1.0917 is acting as a dynamic resistance, reinforcing the bearish bias as long as the price stays below this level.
The overall trend appears bearish, with a potential for further declines if key support levels are breached.
Traders may consider entering short positions below $1.08922, with a target of $1.08570, and a stop loss at $1.09160 to protect against any upside reversal. The combination of the bearish trend and a low RSI suggests the possibility of continued weakness in the near term.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD faces strong resistance at $1.09480, the 50-day EMA level.
- RSI at 44 suggests neutral momentum with room for further movement.
- Key support at $1.09135 may lead to bearish pressure if broken.
The EUR/USD pair is trading at $1.09268, down 0.08% as it flirts with its immediate pivot point of $1.09220. The euro faces resistance at $1.09389, and a break above this level could trigger further bullish momentum toward the next resistance levels of $1.09522 and $1.09673.
On the downside, immediate support is found at $1.09135, with further support at $1.08997 and $1.08868, which will likely serve as key zones to watch if bearish pressure intensifies.
Technically, the 50-day Exponential Moving Average (EMA) at $1.09480 is providing strong resistance and could be a critical point in determining whether the pair moves higher or faces rejection. A failure to break above the 50-day EMA might suggest that further downside is likely in the near term.
The Relative Strength Index (RSI) is currently sitting at 44, indicating neutral momentum. This suggests that the pair has room to move in either direction, depending on upcoming market developments.
Traders may look to buy above $1.09221, with a take-profit target of $1.09492, aligning with resistance zones. A stop-loss at $1.09070 will help limit downside risk if EUR/USD slips below its immediate support level.
In conclusion, while EUR/USD remains in a neutral position, any break above or below the pivot point at $1.09220 will dictate its short-term direction. The pair’s ability to hold above or breach the 50-day EMA will be pivotal in determining its next move.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.09221
Take Profit – 1.09492
Stop Loss – 1.09070
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$271/ -$151
Profit & Loss Per Mini Lot = +$27/ -$15
EUR/USD Price Analysis – Oct 14, 2024
Daily Price Outlook
The EUR/USD pair has extended its decline, hovering around 1.0920 in the early Asian session on Monday. This downward trend is largely fueled by rising risk aversion amid escalating geopolitical tensions in the Middle East and the ongoing conflicts between China and Taiwan, putting selling pressure on the Euro (EUR), which is considered a riskier currency.
Meanwhile, the Euro is feeling the heat from the European Central Bank (ECB), which is expected to cut interest rates further in its remaining monetary policy meetings this year. The ECB's dovish outlook is being reinforced by a faster-than-anticipated drop in Eurozone inflation and a 'fragile' economic recovery.
As these factors combine, the Euro faces significant headwinds, reflecting broader concerns in the global market and highlighting the interconnectedness of geopolitical events and economic policy decisions.
EUR/USD Under Pressure Amid Geopolitical Tensions and Rate Cut Expectations
As we mentioned, the EUR/USD pair has been under pressure, recently declining to around 1.0920 in the early Asian session on Monday. This drop is primarily due to rising risk aversion amid escalating geopolitical tensions in the Middle East and conflicts between China and Taiwan, which are weighing on the Euro (EUR), a riskier currency.
However, the spokesperson from the U.S. Department of State expressed serious concerns about the People's Liberation Army (PLA) military drills in the Taiwan Strait, indicating that the U.S. will closely monitor China's activities and coordinate with allies. Any further escalation in these tensions could lead to increased demand for safe-haven assets like the U.S. dollar (Greenback), putting additional pressure on the EUR/USD pair.
Traders are also anticipating a 25 basis point (bps) rate cut from the Federal Reserve (Fed) in November, following the release of the U.S. Producer Price Index (PPI) on Friday. The CME FedWatch Tool indicates that the market is now pricing in an 86.8% chance of this rate cut, up from 83.3% before the PPI data was released.
This shift in expectations further contributes to the bearish sentiment surrounding the Euro, as the prospect of lower interest rates in the U.S. tends to support the dollar against other currencies.
Euro Faces Pressure Amid ECB Rate Cut Expectations
Moreover, the Euro is experiencing pressure as the European Central Bank (ECB) is expected to cut interest rates further in its upcoming monetary policy meetings this year. This anticipated move stems from a recent and faster-than-expected drop in inflation across the Eurozone, which has raised concerns about the region's economic health.
The ECB's dovish stance is strengthened by a quicker-than-expected decline in inflation within the Eurozone and signs of a weak economic recovery. As inflation drops, the ECB is likely to lower rates to support growth, which could further weaken the Euro against other currencies. Overall, these factors contribute to a bearish outlook for the Euro, as traders respond to the changing economic landscape in Europe.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.09268, down 0.08% as it flirts with its immediate pivot point of $1.09220. The euro faces resistance at $1.09389, and a break above this level could trigger further bullish momentum toward the next resistance levels of $1.09522 and $1.09673.
On the downside, immediate support is found at $1.09135, with further support at $1.08997 and $1.08868, which will likely serve as key zones to watch if bearish pressure intensifies.
Technically, the 50-day Exponential Moving Average (EMA) at $1.09480 is providing strong resistance and could be a critical point in determining whether the pair moves higher or faces rejection. A failure to break above the 50-day EMA might suggest that further downside is likely in the near term.
The Relative Strength Index (RSI) is currently sitting at 44, indicating neutral momentum. This suggests that the pair has room to move in either direction, depending on upcoming market developments.
Traders may look to buy above $1.09221, with a take-profit target of $1.09492, aligning with resistance zones. A stop-loss at $1.09070 will help limit downside risk if EUR/USD slips below its immediate support level.
In conclusion, while EUR/USD remains in a neutral position, any break above or below the pivot point at $1.09220 will dictate its short-term direction. The pair’s ability to hold above or breach the 50-day EMA will be pivotal in determining its next move.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Resistance Levels: Immediate resistance at $1.0955, with further hurdles at $1.0967 and $1.0981.
- Support Levels: Key support at $1.0926, followed by $1.0914 and $1.0900.
- RSI at 44: Indicates neutral momentum, with potential for additional downside if resistance levels hold firm.
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.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.09424
Take Profit – 1.09130
Stop Loss – 1.09583
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$294/ -$159
Profit & Loss Per Mini Lot = +$29/ -$15
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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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Bearish Momentum: EUR/USD remains below the $1.09529 pivot point, indicating sustained bearish pressure.
- Immediate Support Levels: Key support lies at $1.09400; a break could push prices lower toward $1.09275 and $1.09141.
- RSI at 39: RSI indicates a nearing oversold condition, which could support a potential short-term recovery if $1.09400 holds.
The Euro (EUR/USD) is currently trading at $1.09616, down 0.17% for the day, as bearish momentum dominates. The pair is moving below the key pivot point of $1.09529 on the 4-hour chart, signaling continued downward pressure. Immediate resistance is situated at $1.09991, followed by $1.10163 and $1.10362, suggesting that buyers will need to push the pair above these levels to regain control.
On the downside, immediate support lies at $1.09400, with additional supports at $1.09275 and $1.09141. A break below $1.09400 could lead to further declines, targeting these lower levels. The 50-day Exponential Moving Average (EMA) at $1.09906 is currently acting as a critical resistance level, reflecting a bearish bias as long as prices remain beneath it.
The Relative Strength Index (RSI) stands at 39, indicating a nearing oversold condition that could trigger a potential consolidation or short-term rebound if support holds.
Traders may consider a buying opportunity if EUR/USD breaks above $1.09527, targeting a move to $1.09924, with a stop-loss set below $1.09278 to manage risk. On the other hand, failure to hold above $1.09529 could signal a deeper correction toward the next support at $1.09275.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.09527
Take Profit – 1.09924
Stop Loss – 1.09278
Risk to Reward – 1: 1.5
Profit & Loss Per Standard Lot = +$397/ -$249
Profit & Loss Per Mini Lot = +$39/ -$24
EUR/USD Price Analysis – Oct 09, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continues its bearish trend, hovering around 1.0960 as the US Dollar strengthens ahead of the release of the FOMC Minutes. Meanwhile, the Euro (EUR) remains under selling pressure as traders have factored in expectations of further rate cuts by the European Central Bank (ECB).
The ECB is anticipated to lower its Deposit Facility Rate by 50 basis points to 3% by year-end, implying two 25 basis point cuts in the upcoming policy meetings scheduled for next week and December.
Euro Under Pressure as ECB Signals More Rate Cuts
On the EUR front, the Euro is under pressure as traders expect more rate cuts from the European Central Bank (ECB). The ECB is anticipated to lower its Deposit Facility Rate by 50 basis points (bps) to 3% by the end of this year, with two 25 bps cuts planned for the upcoming policy meetings in November and December.
This comes after the ECB already cut borrowing rates by 50 bps earlier this year, as officials believe inflation will return to the target of 2% by 2025. The declining trend in price pressures and weak economic growth in the Eurozone have fueled these expectations.
ECB policymaker and Governor of the Greek Central Bank, Yannis Stournaras, also supports two more rate cuts this year and suggests further reductions in 2025 as inflation continues to ease. In a recent interview with the Financial Times, he mentioned that inflation is slowing down faster than the ECB had predicted in September, reinforcing the case for additional rate cuts. This has increased market expectations for continued monetary easing as the Eurozone economy remains vulnerable.
Therefore, the anticipated rate cuts by the ECB are likely to weaken the Euro against the US Dollar, leading to continued bearish pressure on the EUR/USD pair. As traders react to these expectations, the Euro may struggle to regain strength.
US Dollar Strengthening Puts Pressure on EUR/USD Pair
On the US front, the broad-based US Dollar (USD) continues to strengthen, putting pressure on the EUR/USD pair. The US Dollar Index (DXY) has climbed to a seven-week high of 102.70 as traders adjust their expectations regarding future interest rate cuts from the Federal Reserve (Fed).
Following a strong Nonfarm Payrolls (NFP) report for September, concerns about economic growth and consumer spending have eased, leading many traders to unwind their earlier bets on significant rate cuts. Moreover, heightened tensions in the Middle East have increased the appeal of the USD as a safe haven asset.
Looking ahead, financial market participants expect the Fed to implement a smaller rate cut of 25 basis points in the remaining two policy meetings this year. Investors will be closely watching the Federal Open Market Committee (FOMC) Minutes from September, scheduled for release on Wednesday at 18:00 GMT.
The strengthening US Dollar, driven by positive economic data and shifting rate expectations, is likely to maintain downward pressure on the EUR/USD pair. As traders adjust their positions, the Euro may struggle to recover against the robust Greenback.
EUR/USD - Technical Analysis
The Euro (EUR/USD) is currently trading at $1.09616, down 0.17% for the day, as bearish momentum dominates. The pair is moving below the key pivot point of $1.09529 on the 4-hour chart, signaling continued downward pressure. Immediate resistance is situated at $1.09991, followed by $1.10163 and $1.10362, suggesting that buyers will need to push the pair above these levels to regain control.
On the downside, immediate support lies at $1.09400, with additional supports at $1.09275 and $1.09141. A break below $1.09400 could lead to further declines, targeting these lower levels. The 50-day Exponential Moving Average (EMA) at $1.09906 is currently acting as a critical resistance level, reflecting a bearish bias as long as prices remain beneath it.
The Relative Strength Index (RSI) stands at 39, indicating a nearing oversold condition that could trigger a potential consolidation or short-term rebound if support holds.
Traders may consider a buying opportunity if EUR/USD breaks above $1.09527, targeting a move to $1.09924, with a stop-loss set below $1.09278 to manage risk. On the other hand, failure to hold above $1.09529 could signal a deeper correction toward the next support at $1.09275.
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EUR/USD Price Analysis – Oct 07, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend, remaining under pressure around the 1.0968 level and hitting an intra-day low of 1.0955. This decline can be attributed to a bullish US dollar, which is holding gains near a fresh seven-week high, driven by unexpectedly strong labor market data from the United States for September.
Moreover, the uncertainty surrounding the euro's outlook has further weighed on the pair. Speculation is growing that the European Central Bank (ECB) may consider cutting interest rates again during its monetary policy meeting on October 17. Investors are keenly awaiting the US Consumer Price Index (CPI) data for September, set to be released on Thursday, for more insight into the interest rate outlook.
Strong US Dollar and Labor Data Weigh on EUR/USD Outlook
On the US front, the broad-based US dollar (USD) remains strong, holding onto gains near a fresh seven-week high, thanks to unexpectedly positive labor market data released on Friday. The employment report indicated robust labor demand and solid wage growth, revealing that the economy added 254,000 non-farm jobs in September—significantly higher than the expected 140,000.
Additionally, the unemployment rate fell to 4.1%, down from the anticipated rate and August’s figure of 4.2%. This upbeat employment data has led traders to revise their expectations regarding interest rate cuts from the Federal Reserve (Fed). After a larger-than-usual cut of 50 basis points in September, market bets for another cut in November have diminished.
Moreover, concerns about persistent inflation grew after the release of the hotter-than-expected Average Hourly Earnings for September, which rose to 4.0% year-over-year, surpassing expectations. Month-on-month wage growth also increased by 0.4%, further reducing speculation about significant rate cuts by the Fed.
Therefore, the strong US dollar and positive labor data have put downward pressure on the EUR/USD pair, as traders reassess interest rate cut expectations from the Federal Reserve. This dynamic strengthens the dollar against the euro, leading to further declines in the currency pair.
EUR/USD Faces Downward Pressure Amid Strong US Dollar and ECB Rate Cut Speculation
Conversely, the growing uncertainty regarding the euro's outlook and increasing speculation that the European Central Bank (ECB) may cut interest rates again during its monetary policy meeting on October 17 have emerged as significant factors keeping the EUR/USD pair under pressure. Large bets on a dovish ECB are fueled by concerns that inflation in the Eurozone may stabilize below the bank's 2% target. According to flash estimates, the annual Eurozone Harmonized Index of Consumer Prices (HICP) slowed to 1.8% in September, falling short of expectations.
However, the economic outlook for Germany, the largest economy in the Eurozone, also appears weak due to soft demand. Reports indicate that the German economy is expected to shrink by 0.2% this year, as stated by the ministry led by Robert Habeck of the Green Party. In the meantime, ECB policymaker and French Central Bank Chief François Villeroy de Galhau highlighted the need for another interest rate cut in an interview over the weekend.
He cautioned about the risk of undershooting the inflation target due to weak growth and prolonged restrictive monetary policy. Meanwhile, Eurozone Retail Sales grew by 0.8% annually in August but fell short of the expected 1% increase.
Therefore, the combination of a strong US dollar and uncertainty over the Eurozone's economic outlook has increased downward pressure on the EUR/USD pair. Speculation of further ECB interest rate cuts may continue to weaken the euro, leading to potential declines in the currency pair.
EUR/USD - Technical Analysis
The EUR/USD pair is displaying subdued price action, lingering near the 1.0966 mark. The Euro's slight dip against the Dollar reflects an overall lack of momentum, with the pair trading below its 50-day Exponential Moving Average (EMA) at 1.1036.
Currently, the Relative Strength Index (RSI) stands at 29, suggesting that the pair is in oversold territory and might be ripe for a corrective bounce. However, any upside movement faces immediate resistance at 1.0999, followed by stronger barriers at 1.1016 and 1.1036.
The technical outlook remains bearish as long as EUR/USD stays below the pivot point of 1.0983. A break below the immediate support level at 1.0951 could pave the way for further declines toward 1.0938 and potentially 1.0923.
This bearish sentiment is reinforced by the continued strength of the U.S. dollar amid expectations that the Federal Reserve may delay any further rate cuts due to strong U.S. economic data.
In conclusion, the EUR/USD is likely to remain under pressure unless it can break and sustain above the 1.0983 pivot point. Traders should monitor upcoming U.S. inflation data closely, as it could significantly impact the pair’s direction.
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