Fundamental
Overview
The US Dollar remains the
strongest currency but overall, we haven’t got much action in the past couple
of weeks due to the lack of key catalysts and the market’s pricing remaining
largely unchanged around roughly three rate cuts by the end of 2025 despite a
series of strong US data.
This might be a signal that
we are bottoming out here and we could see a correction to the downside in the
US Dollar. This should translate in a higher EUR/USD exchange rate.
On the EUR side, the
probabilities for a 50 bps cut in December rose to 63% from 26% last Friday due
to the weak Eurozone PMIs.
That might have been an
overreaction as the market pared back those expectations this week. This
morning we saw the probabilities strengthening for a 25 bps cut in December
after ECB’s
Schnabel said that she sees limited room for further rate cuts.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD erased all the losses from the Eurozone PMIs and it’s now
trading around the key 1.05 handle again. The buyers will likely pile in around
these levels to position for a pullback into the major upward trendline
around the 1.07 handle. The sellers, on the other hand, will want to see the price
falling back below the 1.05 handle to increase the bearish bets into new lows.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we had a minor downward trendline defining the bearish momentum on
this timeframe. The price broke above the trendline and the 1.05 handle this
week which should give the buyers more conviction for a move to the major
trendline where we can also find the 61.8% Fibonacci
retracement level for confluence.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor resistance
zone around the 1.0540 level where the price got rejected from several times in
the past days. This is where the sellers keep on stepping in to target new lows.
The buyers, on the other hand, will need the price to break higher to start
targeting new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US PCE report and the latest US Jobless Claims figures. Tomorrow,
we have the German inflation data, while on Friday we conclude the week with
the Eurozone Flash CPI.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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