CFD Trading Rate Euro vs US Dollar (EURUSD)

The Euro (EUR) trades broadly steady in the mid-1.0300s against the US Dollar (USD) on Friday even after President-elect Donald Trump threatened Europe with tariffs "all the way" unless it purchased more US energy products, Scotiabank’s Chief FX Strategist Shaun Osborne says.

EUR/USD shrugs off Trump tariff threat

“The remark pushed the Euro (EUR) marginally lower in overnight trade but had little lasting impact on spot. Tariff risks are already priced into the EUR to some extent and Europe is expected to be able to meet Trump’s demands to buy more US product as it searches for alternatives to Russian supply.”

“Late week price action looks a bit more positive for the EUR in the short run, at least. Another rejection of sub-1.0350 levels today has put in a bullish outside range session on the 6-hour chart and sets up the EUR for a potential, short-term double bottom on a push above 1.0425 (for a rise to 1.05).”

• EUR/USD holds the immediate support of 1.0340, but the Fed’s hawkish cut weights on the pair in the broader term.
• Investors await the US PCE inflation data for fresh guidance on the US interest rate outlook.
• ECB’s Patsalides pushes back bigger rate cut prospects and supports gradual policy easing.

EUR/USD slightly recovers but trades cautiously near the yearly lows around 1.0350 in Friday’s European session. The major currency pair has been exposed to more downside ahead as the US Dollar (USD) has strengthened. However, the USD has given up intraday gains but remains broadly firm on multiple tailwinds, such as the Federal Reserve’s (Fed) hawkish policy outlook and robust United States (US) economic growth.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls back to near 108.10 after posting a fresh two-year high above 108.50 earlier in the day.

The outlook for the Greenback has firmed as the Fed signaled fewer interest rate cuts for 2025 amid robust growth rate after reducing its key borrowing rates by 25 basis points (bps) to the 4.25%-4.50% range in its policy meeting on Wednesday. In the press conference, Fed Chair Jerome Powell said that economic strength gives the central bank the ability to approach rate cuts cautiously.

Meanwhile, the US Bureau of Economic Analysis (BEA) revised the Q3 Gross Domestic Product (GDP) growth rate higher to 3.1%. The agency reported previously that the economy expanded by 2.8%.

In Friday’s session, investors will focus on the November US Personal Consumption Expenditures Price Index (PCE) data, which will be published at 13:30 GMT. Economists estimate that the annual US core PCE inflation, the Fed’s preferred inflation measure, to have accelerated to 2.9% from 2.8% in October, with monthly figures growing by 0.2% compared to 0.3% in the previous month.

Daily digest market movers: EUR/USD holds as Euro rebounds

• EUR/USD gains a temporary ground near the yearly low as the Euro (EUR) gets firm footing against the approval of taxation reforms by German lawmakers, which will result in a reduction in annual tax revenue by 14 billion euros. The scenario will leave more funds with households for disposal, which will boost demand and stimulate economic growth. Higher spending will also diminish risks of Eurozone inflation undershooting the European Central Bank’s (ECB) target of 2%, given that Germany is the largest nation in the old continent.
• Additionally, ECB policymaker and Governor of Central Bank of Cyprus Christodoulos Patsalides has pushed back expectations of bigger rate cuts for stimulating growth, a move that has also boosted the Euro’s appeal in the near term. "I personally prefer small adjustments in a gradual process as opposed to bigger interest rate cuts," Patsalides said on the assumption that the uncertainty over inflation has elevated in both directions, Reuters reported.
• Patsalides said that he would go for bigger interest rate cuts only if inflation expectations show that price pressures “will remain well below the target for a very long time.”
• Currently, traders have priced in four more interest rate cuts from the ECB next year, which will come by June 2025. The ECB has also reduced its Deposit Facility rate four times by 100 basis points (bps) to 3% this year.

Technical Analysis: EUR/USD stays above 1.0340

EUR/USD holds the key support of 1.0340 in Friday’s European session. However, the outlook of the major currency pair remains strongly bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining. 

The 14-day Relative Strength Index (RSI) slides into the bearish range of 20.00-40.00, indicating that a fresh downside momentum has been triggered.

Looking down, the pair could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.

• EUR/USD consolidates in a range just above a two-year low touched earlier this month. 
• The ECB’s dovish outlook is seen undermining the shared currency amid a bullish USD.
• Traders await the US PCE data – the Fed’s preferred inflation gauge – for some impetus.

The EUR/USD pair continues with its struggle to attract any meaningful buyers and oscillates in a range around the 1.0360 area during the Asian session on Friday. Spot prices remain close to a near-one-month low touched on Thursday and seem poised to register its lowest weekly close since November 2022.

Moreover, the shared currency might continue with its relative underperformance on the back of the divergent European Central Bank (ECB) and the Federal Reserve (Fed) monetary policy outlook. In fact, the ECB cut interest rates for the fourth time this year last Thursday and left the door open to further easing in 2025. In contrast, the Fed signaled earlier this week that it would slow the pace of rate cuts in 2025. This, in turn, suggests that the path of least resistance or the EUR/USD pair is to the downside. 

Meanwhile, the Fed's hawkish shift comes on top of persistent geopolitical risks and concerns about US President-elect Donald Trump's tariff plans. This, along with the threat of a US government shutdown ahead of the Friday night deadline, continues to weigh on investors' sentiment and assists the US Dollar (USD) to preserve the post-FOMC strong gains to a two-year high. This further validates the negative outlook for the EUR/USD pair and supports prospects for further losses. 

The USD bulls, however, take a brief pause for a breather and now look to the US Personal Consumption Expenditure (PCE) Price Index, due for release later during the North American session. The Fed's preferred inflation gauge should provide a fresh impetus to the USD and the EUR/USD pair. Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favor of the USD bulls, suggesting that any immediate negative reaction to softer US data is more likely to be short-lived.

• EUR/USD edges lower to 1.0360 in Friday’s early Asian session. 
• The Fed’s cautious approach to easing and stronger US GDP data underpin the USD. 
• The ECB may stay relatively dovish amid concerns over Eurozone economic growth. 

The EUR/USD pair trades with a mild negative bias around 1.0360 during the early Asian session on Friday. The major pair remains on the defensive as the US Federal Reserve (Fed) adopted a less dovish stance despite cutting interest rates by 25 basis points (bps) at its December meeting on Wednesday. Later on Friday, the release of the US Core Personal Consumption Expenditures (PCE) Price Index data will be in the spotlight. 

The Fed decided to cut the interest rates at its final meeting of this year and signaled a much slower monetary policy easing trajectory in 2025. The Summary of Economic Projections, or ‘dot-plot,’ showed only two rate cuts in 2025, down from the four they projected in September. This, in turn, might provide some support to the Greenback in the near term and act as a headwind for the major pair. 

Additionally, stronger-than-expected US third quarter GDP data showed the US economy grew at a 3.1% annual rate. This reading came in above the market consensus and the previous reading of 2.8%. 

Across the pond, the European Central Bank (ECB) is anticipated to cut the interest rate further by at least a full percentage point next year. The more dovish ECB easing policy than that of the Fed is likely to weigh on the Euro (EUR) against the Greenback. Analysts expect that the ECB may have to accelerate rate cuts in 2025 amid the economic concerns in the Eurozone, political instability, and Trump tariff threats, which might contribute to the EUR’s downside. 

• EUR/USD rises by 0.45% on Thursday to 1.0400, recovering slightly from a sharp drop.
• RSI stands at 35, in negative territory but rising sharply, suggesting an attempt to regain momentum.
• MACD histogram shows rising red bars, indicating persistent bearish pressure, albeit with signs of easing.

After a steep decline of more than 1% in the prior session, EUR/USD managed a modest rebound on Thursday, climbing 0.45% to trade near 1.0400. Despite this partial recovery, the pair remains comfortably below the 20-day Simple Moving Average (SMA), which continues to cap any meaningful upside attempts.

Technical indicators paint a mixed picture. The Relative Strength Index (RSI) has improved to 35, still in negative territory but rising sharply, hinting at diminishing selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram prints rising red bars, reflecting ongoing bearish momentum, though it may be starting to wane.

A sustained break above the 20-day SMA is needed to shift the short-term outlook to a more positive stance. Until then, the bias remains tilted to the downside, and the pair’s recent gains appear more like a relief bounce than a genuine trend reversal.

EUR/USD daily chart

• EUR/USD rebounds to near 1.0400 as the US Dollar takes a breather after the rally induced by the Fed’s hawkish guidance.
• Fed officials see only two interest rate cuts in 2025, fewer than the four projected earlier.
• ECB Wunsch said he is comfortable with market expectations of four 25 bps interest rate cuts in 2025.

EUR/USD jumps to near 1.0400 in Thursday’s European session as US Dollar’s (USD) bulls take a breather after a sharp run-up on Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near a fresh two-year high above 108.00. The Greenback attracted significant bids after the Federal Reserve (Fed) reduced its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% on Wednesday, as expected, but signaled fewer interest rate cuts for the next year.

In the latest dot plot, the Fed revised its projections for the number of interest rate cuts in 2025 to two from the four forecasted in the September monetary policy meeting. 

In the press conference, Fed Chair Jerome Powell pointed to uncertainty over inflation, easing downside risks to employment and strong growth in the second half of the year as factors that forced officials to turn cautious on interest rate cuts. "I also point out that we're closer to the neutral rate, which is another reason to be cautious about further moves," Powell added.

Meanwhile, the Fed has also revised the forecast for the core Personal Consumption Expenditures Price Index (PCE), the Fed's preferred inflation measure, for 2025 to 2.5%, up from prior estimates of 2.2% in its latest economic projections.

Jerome Powell refrained from commenting on the consequences of the incoming immigration, tariff, and taxation policies by President-elect Donald Trump on the economy. "It is very premature to make any kind of conclusions,” he said. “We don’t know what will be tariffed, from what countries, for how long, in what size," Powell added.

Daily digest market movers: EUR/USD rises as Euro recovers

• EUR/USD advances on Thursday as the Euro (EUR) performs strongly against its major peers even though European Central Bank (ECB) officials have guided a continuation of the policy-easing spell in 2025. The ECB has already reduced its Deposit Facility rate by 100 basis points (bps) to 3% and is expected to cut by a similar margin next year.
• ECB policymaker and Governor of National Bank of Belgium Pierre Wunsch has also backed four more interest rate cuts, citing concerns over Eurozone economic growth due to protectionist US policies under Trump’s administration. “Four more rate cuts are a meaningful scenario that I feel relatively comfortable with,” Wunsch said.
• Pierre Wunsch openly discussed a potential Euro parity with the US Dollar in an attempt to compensate for the 10% tariffs by the US. “If the Euro touches parity against the dollar, we wouldn't lose as much in terms of competitiveness,” Wunsch said and added: “A larger Euro depreciation would cushion the impact of tariffs on growth.”
• In Thursday’s session, the shared currency pair will be influenced by the US Initial Jobless Claims data for the week ending December 13 and the second estimate of Q3 Gross Domestic Product (GDP), which will be published at 13:30 GMT.
• On Friday, investors will pay close attention to the US PCE inflation data for November. The core PCE Price Index data is estimated to have accelerated to 2.9% from 2.8% in October. On month, the inflation measure is expected to have grown by 0.2%, slower than the prior release of 0.3%.

Technical Analysis: EUR/USD recovers from 1.0340

EUR/USD bounces back after refreshing a more than three-week low at 1.0340 after the Fed meeting. However, the outlook of the major currency pair remains clearly bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining. 

The 14-day Relative Strength Index (RSI) slides into the bearish range of 20.00-40.00, suggesting that a fresh downside momentum has been triggered.

Looking down, the pair could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.

• EUR/USD edges lower to 1.0370 in Thursday’s Asian session. 
• The Fed cut its federal funds rate by 25 bps, lowering the rate to a range of 4.25% to 4.50%.
• The dovish remarks from the ECB weigh on the Euro.

The EUR/USD pair weakens to near 1.0370 during the Asian trading hours on Thursday. The hawkish rate cut by the US Federal Reserve (Fed) lifts the US Dollar (USD) and drags the major pair lower. Later on Thursday, the US weekly Initial Jobless Claims, Existing Home Sales, and final reading of Gross Domestic Product Annualized for the third quarter (Q3) will be released. 

As widely expected, the Fed delivered a hawkish cut of 25 basis points (bps) at its December meeting on Wednesday, bringing its benchmark lending rate to a range of 4.25%-4.50%, a two-year low. The Summary of Economic Projections, or ‘dot-plot,’ showed only two rate cuts in 2025, down from the four they projected in September. 

During the Press Conference, Fed Chair Jerome Powell made clear that the Fed is going to be cautious about further cuts as inflation remains stubbornly above the central bank’s 2% target. The expectation of a slower pace of Fed rate reductions next year provides some support to the Greenback against the Euro (EUR). 

Across the pond, investors expect the European Central Bank (ECB) to cut the interest rates at every meeting until June 2025 as policymakers are concerned about growing economic risks in the Eurozone. The expectation of aggressive rate reductions by the ECB might continue to undermine the shared currency.

• EUR/USD experiences sharp decline in response to the Federal Reserve's 25 basis point rate cut paired with a cautious outlook on future policy adjustments.
• Fed Chair Jerome Powell emphasizes a careful approach to further rate changes, noting persistent inflation risks, stable labor market.
• Fed's updated economic projections indicate only modest rate reductions in the coming years, setting the federal funds rate target at 3.4% by 2026.

The EUR/USD sank sharply after the Fed cut interest rates but also adopted a slightly hawkish stance, as the central bank estimates 100 basis points of easing toward the next two years. At the time of writing, the pair trades below 1.0400, volatile.

EUR/USD pair tumbles below 1.0400 as Fed Chair Jerome Powell speaks

In his press conference, Powell said that the central bank could be more cautious about considering additional adjustments, acknowledging that the policy is less restrictive. He added that risks and uncertainty around inflation are skewed to the upside and added that higher inflation is one of the reasons for the adjustment to the dot plot.

Jerome Powell added that it could take a year or two for inflation to get to the 2% goal, adding that the labor market is not cooling in a way that raises concerns.

The Federal Reserve cut rates by 25 basis points to the 4.25%-4.50% range, yet the decision was not unanimous, as Cleveland Fed President Beth Hammack voted to keep rates unchanged.

The statement changed little from the last meeting, though traders were focused on the Summary of Economic Projections (SEP).

The central bank's monetary policy statement revealed that economic activity continued to expand solidly and acknowledged the labor market conditions had eased. Despite the improvement in employment, Fed policymakers decided to keep the language of “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance.”

Meanwhile, the SEP showed that officials penciled just two rate cuts in 2025 and 2026, driving the fed funds rate to 3.4% in 24 months.

EUR/USD Reaction to Fed's Chair Powell press conference

The EUR/USD has plunged sharply, clearing the 1.0450 psychological level, extending its losses toward the day's lows at 1.0410. The pair would remain trading volatile, as Fed Chair Powell takes the stand. Immediate resistance is seen at the December 13 low of 1.0452, and support at 1.0400. If cleared, the next support would be the YTD low of 1.0331.

• EUR/USD sees a sharp decline after the Federal Reserve cuts rates by 25 basis points but indicates a slower pace for future reductions.
• Cleveland Fed President Beth Hammack cast a dissenting vote, preferring to keep rates steady.
• The Fed's Summary of Economic Projections (SEP) suggests only two rate cuts in 2025 and 2026.

The EUR/USD fell sharply, from around 1.0500, after the Federal Reserve lowered borrowing costs but adopted a cautious stance on the interest rates path in 2025. At the time of writing, the pair trades volatile at around the 1.0400 – 1.0500 range, below its opening price.

EUR/USD pair tumbles into the 1.0400 – 1.0500 range following a Federal Reserve rate cut accompanied by a guarded outlook for 2025

The Federal Reserve cut rates by 25 basis points to the 4.25%-4.50% range, yet the decision was not unanimous, as Cleveland Fed President Beth Hammack voted to keep rates unchanged. T

There was little change in the statement compared to the last meeting, though traders were focused on the Summary of Economic Projections (SEP).

The central bank's monetary policy statement revealed that economic activity continued to expand solidly and acknowledged the labor market conditions had eased. Despite the improvement in employment, Fed policymakers decided to keep the language of “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance.”

Meanwhile, the SEP showed that officials penciled just two rate cuts in 2025 and 2026, driving the fed funds rate to 3.4% in 24 months.

SEP

Source: Federal Reserve

Next is the Fed Chair Jerome Powell's press conference, which would be scrutinized for traders to look for cues regarding the monetary policy for the upcoming year.

EUR/USD Reaction to Fed’s decision

The EUR/USD has plunged sharply, clearing the 1.0450 psychological level, extending its losses toward the day's lows at 1.0410. The pair would remain trading volatile, as Fed Chair Powell takes the stand. Immediate resistance is seen at the December 13 low of 1.0452, and support at 1.0400. If cleared, the next support would be the YTD low of 1.0331.

• EUR/USD edges slightly higher on Wednesday, settling around 1.0500 but still capped by the 20-day SMA.
• RSI holds at 42 in negative territory, signaling persistent caution and subdued buying interest.

The EUR/USD pair remains in a holding pattern on Wednesday, hovering near the 1.0500 mark. Despite recent attempts to gain traction, the 20-day Simple Moving Average (SMA) near 1.0550 continues to act as a formidable barrier, preventing the pair from establishing a more constructive bias. Market participants are now looking to the upcoming Federal Reserve (Fed) decision for fresh directional cues.

Technical indicators reflect a calm environment. The Relative Strength Index (RSI) is flat at 42, firmly in negative territory and suggesting limited buying interest. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram shows flat green bars, underscoring the pair’s lack of decisive momentum.

In the near term, a clear break above the 20-day SMA would be required to shift the short-term outlook in favor of the bulls. Until then, the bias remains tilted to the downside, with the 1.0500 handle and the 1.0480 support area in focus. The upcoming Fed decision could provide the necessary catalyst for a breakout or further consolidation, shaping the pair’s short-term trajectory.

EUR/USD daily chart

• EUR/USD consolidates in a tight range near 1.0500, with investors focusing on the Fed’s policy meeting.
• The Fed is widely expected to cut interest rates by 25 bps but to deliver slightly hawkish remarks on policy guidance.
• ECB’s Rehn said that inflation stabilizing near the central bank’s target of 2% paves the way for more interest rate cuts.

EUR/USD trades in a tight range near the psychological figure of 1.0500 in Wednesday’s European session. The major currency pair consolidates as investors await the outcome of the last Federal Reserve’s (Fed) policy meeting of the year, which will conclude at 19:00 GMT. The Fed will also release the revision of the Summary of Economic Projections (SEP), also known as the dot plot, which shows fresh economic projections and where policymakers see Federal Fund Rates heading in the medium and long term.

Analysts at Bank of America (BofA) expect the Fed to reduce interest rates by 25 basis points (bps) to the 4.25%-4.5% range. The CME FedWatch tool also shows that market participants have fully priced in a 25 bps interest rate reduction.

With traders fully pricing in a standard rate cut announcement, investors will focus primarily on Fed Chair Jerome Powell’s press conference on interest rate guidance. BofA analysts expect Powell to signal a gradual rate-cut approach ahead, potentially indicating a pause in January if economic data meets expectations.

Meanwhile, traders are also confident that the Fed will leave interest rates unchanged at 4.25%-4.50% in January, according to the CME FedWatch tool.

Ahead of the Fed policy decision, the US Dollar (USD) shows a muted price action, with the US Dollar Index (DXY) wobbling near 107.00.

Daily digest market movers: EUR/USD remains muted with Fed policy in focus

• EUR/USD trades on the sidelines due to consolidation in the US Dollar ahead of the Fed’s policy decision. Meanwhile, the Euro’s (EUR) outlook remains bearish as investors expect the European Central Bank (ECB) to head to the neutral rate, which officials have forecasted around 2%, by the first half of 2025.
• Traders expect the ECB to reduce interest rates at every meeting till June 2025. Officials are highly concerned about growing economic risks in the Eurozone and are confident that price pressures will sustainably return to the central bank’s target next year.
• On Tuesday, ECB policymaker and Finnish central bank Governor Olli Rehn said that inflationary pressures stabilizing near the bank’s target of 2% set the stage for further interest rate reduction. Rehn refrained from providing a specific rate cut path and said, “The speed and scale of the rate cuts will be determined in each meeting on the basis of incoming data and comprehensive analysis.”
• When asked about how the continent will face incoming tariff hikes from the US President-elect Donald Trump administration, Rehn said, "Negotiation is preferable, and the European Union's (EU) negotiating position can be strengthened by demonstrating in advance that it is ready to take countermeasures if the United States threatens Europe with higher tariffs.”

Technical Analysis: EUR/USD consolidates around 1.0500

EUR/USD has traded back and forth around the psychological figure of 1.0500 over the last five trading days. The major currency pair faces pressure near the 20-day Exponential Moving Average (EMA), which trades around 1.0535, suggesting that the near-term trend is bearish.

The 14-day Relative Strength Index (RSI) revolves around 40.00. The bearish momentum should trigger if the RSI (14) falls below that level.

Looking down, the two-year low of 1.0330, reached on November 22, will provide key support. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.

• EUR/USD gains momentum to around 1.0505 in Wednesday’s Asian session. 
• The US Fed is expected to make a third consecutive rate cut at its December meeting on Wednesday. 
• The rising bet for the ECB's further interest rate cuts could undermine the Euro. 

The EUR/USD pair holds positive ground to near 1.0505 during the early European session on Wednesday. However, the cautious sentiment ahead of the Federal Reserve (Fed) interest rate decision meeting could weigh on riskier assets like the Euro (EUR). 

The Fed is widely expected to lower borrowing costs by 25 basis points (bps) at its December meeting on Wednesday, bringing its overnight borrowing rate by a quarter percentage point to a range of between 4.25% and 4.50% from its current range of between 4.50% and 4.75%. The attention will shift to the Fed’s updated economic projections and the dot plot, which might offer some hints about expectations for the rate trajectory through 2025 and 2026. Any signs of a more cautious stance on rate reduction going forward could boost the Greenback against the Euro (EUR). 

Across the pond, the European Central Bank (ECB) President Christine Lagarde noted on Monday that further interest rate cuts were likely. “The direction of travel is clear, and we expect to lower interest rates further,” Lagarde said. Additionally, the ECB Governing Council member Olli Rehn stated that interest rates will continue to head lower as inflation starts to stabilize around the 2% target. Isabel Schnabel, the ECB's most influential policy hawk, emphasized market bets on further gradual reductions in borrowing costs in the Eurozone as the economy stutters and fears about high inflation fade. 

However, the pace and size of the rate cuts will be determined in each meeting on the basis of incoming data and comprehensive analysis. This, in turn, might cap the upside for the major pair in the near term.

• EUR/USD shed a fresh fifth of a percent against the Greenback on Tuesday.
• Fed-centric US data docket dominates investor sentiment.
• EU data remains light this week, traders focus on upcoming Fed rate call.

Bullish momentum behind the Euro evaporated on Tuesday, dragging the pair back beneath the 1.0500 handle as traders buckle down for the wait to the Federal Reserve’s (Fed) last rate call of 2024. European data is relatively sparse this week, compelling Fiber traders to navigate a substantial array of US data.

Euro markets largely overlooked multiple European Central Bank (ECB) officials' appearances earlier in the week, and despite European December PMI figures surpassing expectations. Pan-EU Services PMI survey figures still remain in contraction due to concerns over a deepening economic slowdown in Europe, which continues to unsettle investors and businesses.

US Retail Sales figures lurched higher to 0.7% MoM, stoking some mild concern among investors that maybe the Fed doesn’t need to pursue an aggressive rate-cutting strategy after all, especially when counting a recent uptick in inflation metrics. Despite this, markets are still broadly pricing in a third straight rate cut from the Fed on Wednesday, with 95% odds favoring a 25 bps rate trim according to the CME’s FedWatch Tool.

EUR/USD price forecast

The EUR/USD daily chart reveals a period of consolidation just above the 1.0450 level after the pair’s steep decline from its late October highs near 1.1000. This recent stabilization coincides with investor expectations surrounding the Federal Reserve's anticipated quarter-point rate cut on Wednesday, which has injected a degree of uncertainty into the greenback’s trajectory. The price action remains capped by the 50-day Exponential Moving Average (EMA) at 1.0658, with the longer-term bearish bias underscored by the 200-day EMA at 1.0809, sloping downward. A break below the key support at 1.0450 could see bears retesting the psychological 1.0400 level, which served as a critical floor in late November.

The MACD indicator at the bottom of the chart shows bearish momentum has eased slightly, as the MACD line flattens and approaches a bullish crossover with the signal line. However, the histogram remains in negative territory, suggesting that upside attempts may still face significant headwinds. A Fed rate cut on Wednesday, if accompanied by a dovish tone, could weaken the dollar further, paving the way for a rebound toward 1.0600 and potentially the 50-day EMA resistance. Conversely, a hawkish surprise may reinforce the dollar’s strength, triggering renewed selling pressure on the EUR/USD pair and opening the door for a retest of yearly lows. Traders are likely to remain cautious ahead of the Fed decision, keeping price action in a tight range in the short term.

EUR/USD daily chart

• EUR/USD edges slightly lower on Tuesday, hovering around 1.0505 and failing to gain traction.
• RSI declines mildly to 43, remaining in negative territory and signaling limited buying interest.

The EUR/USD pair continues to tread water on Tuesday, inching down to 1.0505 and showing no clear directional bias. Despite recent attempts to stabilize above the 1.0500 mark, the pair remains capped by the 20-day Simple Moving Average (SMA) near 1.0550, underscoring the persistent headwinds facing any meaningful recovery.

Technical indicators offer a mixed picture. The Relative Strength Index (RSI) has dipped slightly while holding at 43, indicating subdued buying interest and keeping the pair firmly in negative territory. On the other hand, the Moving Average Convergence Divergence (MACD) histogram is printing rising green bars, suggesting some underlying bullish potential. However, this has yet to translate into a sustained push above the 20-day SMA.

Until EUR/USD decisively clears the 20-day SMA, the overall outlook remains tilted to the downside. Immediate support is seen at the psychological 1.0500 level, followed by the 1.0480 area and then the 1.0450 zone. A break below these supports could accelerate selling pressure, while a successful climb above 1.0550 would be needed to shift sentiment and improve the technical stance.

EUR/USD daily chart

The Euro (EUR) continues to hold steady at around 1.0500 against the US Dollar (USD) despite increasing political uncertainty in Germany, France and a Moody’s rating downgrade on French credit on Friday, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks modestly skewed to the upside

“German Chancellor Scholz loses confidence vote and this paves the way for snap elections on 23 Feb 2025.”

“Mild bullish momentum on daily chart is intact while RSI rose. Risks are modestly skewed to the upside. Resistance here at 1.0540 (23.6% fibo retracement of Oct high to Nov low), 1.0610 and 1.0670/80 levels (38.2% fibo, 50DMA). Support at 1.0460, 1.0410 levels.”

The Euro (EUR) is a little softer but is holding recent trading ranges against the USD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

EUR soft but holds range

“Germany’s IFO and ZEW surveys were released earlier. The Ifo survey reflected weaker business confidence this month at 84.7, down from 85.6, with activity in the manufacturing and service sectors deteriorating.”

“The ZEW survey of investor confidence reflected a jump in expectations, perhaps reflecting hopes that the recent unsettled political backdrop will be resolved by new elections in February. Wider 2Y EZ/US spreads (-222bps for 2Y cash bonds) are keeping the EUR tone defensive.

“The EUR has yielded minor gains through the low 1.05 area made late yesterday very easily. Spot remains within the recent trading range, but the EUR’s undertone remains soft and trend oscillators are aligned bearishly across the short-, medium– and long-term oscillators. This will tend to limit the EUR’s ability to rally (to the low/mid 1.05s) and maintain focus on testing support (1.0450).”

• EUR/USD falls below 1.0500 as the US Dollar stays broadly firm on expectations that the Fed will cut interest rates but deliver hawkish guidance for 2025.
• ECB officials see the continuation of the gradual policy-easing cycle as appropriate.
• The collapse of German Scholz’s government has paved the way for general elections on February 23.

EUR/USD slides below the psychological resistance of 1.0500 on Tuesday. The major currency pair remains fragile as the US Dollar (USD) ticks higher on expectations that the Federal Reserve (Fed) will adopt a slightly hawkish stance after reducing its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% on Wednesday.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks higher to near 107.00.

According to the CME FedWatch tool, traders have priced in a 25 bps interest rate reduction for Wednesday's policy meeting. The data also shows that the Fed is expected to leave interest rates unchanged in the January meeting.

Analysts at Macquarie said that the Fed’s stance could turn “slightly hawkish” from “dovish” on the assumption that the “recent slowdown in the pace of US disinflation, a lower Unemployment Rate than what the Fed projected in September, and exuberance in US financial markets are contributing to this more hawkish stance.”

In Tuesday’s session, investors will focus on the United States (US) monthly Retail Sales data for November, which will be published at 13:30 GMT. Economists estimate that Retail Sales, a key measure of consumer spending, rose by 0.5%, faster than the 0.4% growth in October.

Daily digest market movers: EUR/USD falls while US Dollar remains broadly firm

• EUR/USD drops after facing pressure near the key resistance of 1.0530 in Tuesday’s European session. The major currency pair struggles to break above the aforementioned hurdle as its broader outlook of the Euro (EUR) is bearish amid firm expectations that the European Central Bank (ECB) will reduce interest rates at every meeting until June 2025.
• The ECB has delivered a 100-bps interest rate reduction this year and is expected to loosen its monetary policy further by a similar margin next year, given that officials are confident about Eurozone inflation returning to the central bank’s target of 2%. Also, ECB policymakers have become worried about growing economic risks due to weak demand and potential tariffs from incoming US President-elect Donald Trump.
• After the decision to cut rates on Thursday, a number of ECB officials, including President Christine Lagarde, have agreed to the need for more interest rate cuts. On Monday, Lagarde said that the ECB "will cut rates further if incoming data confirm that disinflation is on track". Lagarde's dovish remarks on the policy outlook were backed by the assumption that "inflation momentum for services has dropped steeply recently."
• ECB executive board member Isabel Schnabel, who remains an outspoken hawk, also agreed to a gradual removal of policy restrictions. “Lowering policy rates gradually towards a neutral level is the most appropriate course of action,” Schnabel said at an event in Paris on Monday. However, she warned that the ECB should remain vigilant to any “shocks that have the capacity to destabilize inflation expectations.”
• On the political front, the German parliament has passed the no-confidence motion against Chancellor Olaf Scholz’s government, which paved the way for general elections on February 23. According to market expectations, conservative challenger Friedrich Merz would defeat Scholz.
• In the European session, the German IFO sentiment surveys for December have shown that Business Climate and Expectations at 84.7 and 84.4, respectively, have come in weaker-than-expected. IFO Current Assessment, an indicator of current conditions and business expectations, surprisingly rose to 85.1 from 84.3 in November.

Technical Analysis: EUR/USD wobbles around 1.0500

EUR/USD trades around the psychological figure of 1.0500, where the pair has been hovering for the last four trading days. The major currency pair faces pressure near the 20-day Exponential Moving Average (EMA), which trades around 1.0540, suggesting that the near-term trend is bearish.

The 14-day Relative Strength Index (RSI) revolves around 40.00. The bearish momentum should trigger if the RSI (14) falls below 40.00.

Looking down, the two-year low of 1.0330 will provide key support. Conversely, the 20-day EMA will be the key barrier for the Euro bulls.

• EUR/USD posts modest gains to around 1.0510 in Tuesday’s Asian session. 
• The negative outlook of the pair remains intact below the 100-day EMA with the bearish RSI indicator.
• The first support level is seen at 1.0433; the immediate resistance level emerges in the 1.0600-1.0610 zone. 

The EUR/USD pair trades with mild gains to near 1.0510 during the Asian session on Tuesday. Nonetheless, the upside for the pair might be limited as the European Central Bank (ECB) expects to cut interest rates further if inflation settles at its 2% target as it expects. 

The ECB President Christine Lagarde on Monday said, "If the incoming data continue to confirm our baseline, the direction of travel is clear, and we expect to lower interest rates further.” Meanwhile, Isabel Schnabel, the ECB's most influential policy hawk, emphasized market bets on further gradual reductions in borrowing costs in the Eurozone as the economy stutters and fears about high inflation fade.

According to the daily chart, EUR/USD keeps the bearish vibe as the price remains capped below the key 100-day Exponential Moving Average (EMA). The downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which is located below the midline around 42.90, suggesting that the path of least resistance is to the downside. 

The lower limit of the Bollinger Band at 1.0433 acts as an initial support level for the major pair. A decisive break below the mentioned level could expose 1.0332, the low of November 22. Extended losses could see a drop to 1.0300-1.0290, the psychological level and the low of November 30, 2022.

On the upside, the first upside barrier for the major pair emerges at the 1.0600-1.0610 regions, representing the upper boundary of the Bollinger Band and the round mark. Sustained bullish momentum above this level could pave the way to 1.0758, the 100-day EMA, en route to the 1.0800 barrier. 

EUR/USD daily chart

• EUR/USD is trading thin and flat near the 1.0500 handle as bulls struggle.
• Another Fed rate call and other key US data will keep Fiber focused on the US side this week.
• Fed expected to cut rates for a third consecutive meeting on Wednesday.

EUR/USD struck a sluggishly bullish note on Monday, drifting into the high end of near-term consolidation just north of the 1.0500 handle, albeit with a notable lack of conviction. European data is comparatively limited this week, leaving Fiber traders to face a hefty data docket on the US side of things.

Markets largely overlooked multiple European Central Bank (ECB) officials' appearances to kick off the new week. European December PMI figures surpassed expectations, yet Services PMI surveys remain in contraction due to concerns over a deepening economic slowdown in Europe, which continues to unsettle investors and businesses.

Markets are anticipating the Fed’s rate decision on Wednesday, with a 25 bps rate cut fully factored in at 99.1%, according to the CME’s FedWatch Tool. Traders will pay close attention to the Fed’s revised Summary of Economic Projections (SEP) and the interest rate predictions from policymakers.

US PMI data for December presented a mixed picture: the Services PMI hit multi-year highs, whereas the Manufacturing PMI dropped further below 50.0, indicating a contraction. Retail Sales figures will be released on Tuesday but may attract limited market focus ahead of the Fed’s final rate decision of the year.

EUR/USD price forecast

The EUR/USD daily chart reflects an overall bearish trend, as the pair continues to trade below both the 50-day EMA at 1.0659 and the 200-day EMA at 1.0810. The downward-sloping moving averages confirm sustained selling pressure, with the euro unable to regain meaningful ground against the dollar. The MACD indicator remains subdued, with its signal line hovering below zero, signaling weak momentum and caution from buyers.

The most recent candle reveals modest bullish action as EUR/USD closed slightly higher at 1.0517, marking a small rebound after several sessions of sideways movement. However, the pair remains unable to convincingly break above the 1.0550 resistance zone, suggesting limited upside potential in the near term. If buyers gain traction, a retest of the 50-day EMA near 1.0660 could be on the cards. Conversely, failure to sustain this rebound may expose the pair to renewed selling pressure, with support at 1.0450 likely to come into focus. The overall sentiment remains bearish until a clear break above key resistance levels materializes.

EUR/USD daily chart