CFD Trading Rate Euro vs US Dollar (EURUSD)

Chance for Euro (EUR) to retest the 1.0500 level before a more sustained recovery is likely. In the longer run, current price movements are likely part of a range trading phase, expected to be between 1.0465 and 1.0610, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR expected to trade between 1.0465 and 1.0610

24-HOUR VIEW: “Our view of sideways trading yesterday was incorrect. Instead of trading sideways, EUR fell to 1.0498 before recovering to close at 1.0526 (-0.25%). Despite the decline, downward momentum has not increased much. That said, there is a chance for EUR to retest the 1.0500 level before a more sustained recovery is likely. The major support at 1.0465 is unlikely to come under threat. On the upside, resistance levels are at 1.0545 and 1.0570.”

1-3 WEEKS VIEW: “In our most recent narrative from last Friday (06 Dec, spot at 1.0585), we indicated that EUR ‘has to break and remain above 1.0610 before further advance to 1.0650 is likely.’ Yesterday, EUR dropped to a low of 1.0498. Although our ‘strong support’ level of 1.0500 was only slightly breached, upward momentum has largely faded. The current price movements are likely part of range trading phase, expected to be between 1.0465 and 1.0610.”

• EUR/USD receives downward pressure due to market caution ahead of the US inflation report.
• US headline and core inflation are estimated to rise to 2.7% and 3.3%, respectively, YoY in November.
• The Euro faces challenges as the ECB is widely expected to implement a 25 basis point rate cut on Thursday.

EUR/USD remains subdued for the fourth consecutive day, trading around 1.0530 during the Asian session on Wednesday. However, the pair faced challenges as the US Dollar (USD) gained support from market caution, which could be attributed to the upcoming US Consumer Price Index (CPI) data release due on Wednesday.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, appreciates as the US Treasury yields continue to rise amid market caution ahead of the Federal Reserve’s (Fed) policy decision. The DXY maintains its position around 106.40 with 2-year and 10-year yields on US Treasury coupons standing at 4.16% and 4.23%, respectively, at the time of writing.

The US CPI inflation is estimated to rise to 2.7% YoY in November from 2.6% in October. Meanwhile, the core CPI, excluding Food & Energy, is expected to increase 3.3% YoY. Any indications of stalled progress could significantly diminish the likelihood of a Federal Reserve’s (Fed) rate cut. However, markets are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points, according to the CME FedWatch Tool.

In the Eurozone, traders await the European Central Bank's (ECB) policy decision, scheduled for release on Thursday. The central bank is widely expected to implement a 25 basis point cut, lowering the Main Refinancing Operations Rate from 3.4% to 3.15% and the Deposit Facility Rate from 3.25% to 3.0%.

• EUR/USD softened further on Tuesday, testing 1.0500 once again.
• The Fiber pair has closed slightly lower for a third straight day.
• Euro traders are bracing for back-to-back key data prints.

EUR/USD shed close to 0.2% on Tuesday, chalking in a third straight declining trading day and testing down into the 1.0500 handle as the Euro’s near-term bullish recovery fizzles out. Fiber is backsliding into a cautious stance ahead of a key US Consumer Price Index (CPI) inflation print due on Wednesday, with another rate call from the European Central Bank (ECB) just around the corner on Thursday.

Wednesday’s CPI inflation print, which serves as one of the last key data releases before the Federal Reserve’s (Fed) last policy meeting in 2024. Signs that progress on inflation has stalled could kill hopes for a third consecutive rate cut on December 18. At the current cut, Wednesday’s US CPI inflation for November is expected to rise slightly to 2.7% YoY from the previous 2.6%, while core annualized CPI is forecast to hold steady at 3.3%.

According to the CME’s FedWatch Tool, rate traders are pricing on 85% odds of one last quarter-point rate cut for the year.

The ECB’s latest rate call is set for Thursday, and the rate meeting is widely expected to deliver another quarter-point cut to investors. The ECB’s Main Refinancing Operations Rate is forecast to get trimmed to 3.15% from 3.4%, while the ECB Rate on Deposit Facility is anticipated to decline to a flat 3.0% from 3.25%.

EUR/USD price forecast

The EUR/USD daily chart highlights the continuation of a bearish medium-term trend, as the pair remains comfortably below the 50-day EMA at 1.0696 and the 200-day EMA at 1.0826. After the sharp sell-off in November, which saw the pair plunge to a multi-month low near 1.0450, EUR/USD has been consolidating in a tight range. Recent attempts to reclaim the 1.0600 handle have faltered, underscoring the strength of the prevailing bearish sentiment. The broader downtrend remains intact, with lower highs and lower lows defining price action since late October.

The most recent candle closed with a bearish tone at 1.0531, marking a decline of 0.18% on the day. Despite a brief attempt to push higher during the session, the pair failed to sustain momentum above 1.0560, resulting in a long upper wick and signaling selling pressure. Key support at 1.0500 is now back in focus, with a break below this level likely to expose the November low of 1.0450. Conversely, immediate resistance resides at 1.0600, with the descending 50-day EMA adding to the challenge for bulls.

The MACD histogram remains slightly positive but is flattening, indicating fading bullish momentum from the recent rebound. Furthermore, the MACD line is below the signal line, suggesting bearish control persists. To shift sentiment, bulls need a clear break above 1.0600, which could spark a recovery toward 1.0700. However, failure to hold above 1.0500 would likely confirm the bearish trend, paving the way for an extension toward 1.0400 in the coming sessions.

EUR/USD daily chart

• EUR/USD declines by 0.33% on Tuesday, settling at 1.0525 after falling below the 20-day SMA.
• RSI drops sharply to 40, remaining in the negative area, signaling weakening momentum.
• MACD histogram prints decreasing green bars, highlighting fading bullish traction.

The EUR/USD pair extended its losses on Tuesday, retreating to 1.0525 and slipping slightly below the 20-day Simple Moving Average (SMA). This development undermines the pair's short-term constructive outlook, raising concerns about further downside risks if the 20-day SMA is definitively breached.

Technical indicators point to a deteriorating momentum. The Relative Strength Index (RSI) has declined sharply to 40, signaling increased selling pressure and remaining firmly in the negative territory. Similarly, the Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars, indicating fading bullish traction and reinforcing a bearish bias.

On the downside, the loss of the 20-day SMA around 1.0550 exposes the pair to further declines, with the next support levels at 1.0500 and 1.0480. For any recovery, EUR/USD must first regain the 20-day SMA and then break above the 1.0600 resistance level to revive the bullish case and shift momentum back in favor of the bulls.

EUR/USD daily chart

• Euro loses ground, although Germany reports steady inflation; traders await the ECB’s decision.
• NFIB Business Optimism Index in the US climbs to 101.7, marking the highest since June 2021.
• Traders await upcoming US CPI data, searching for clues about the Fed’s December decision.

The Euro fell from 1.0600 on Monday and tumbled over 80 pips against the Greenback on Tuesday after Germany revealed that inflation remains steady. Meanwhile, the NFIB Business Optimism Index in the US surged to its highest level since June 2021. The EUR/USD trades at 1.0519.

EUR/USD drops amidst high US business confidence, anticipation of ECB rate cuts

The National Federation of Independent Business (NFIB) revealed that small businesses grew optimistic about the economy, with the index coming at 101.7, exceeding forecasts of 95.3 and 93.7 in October. Market participants mainly ignored the data, as the EUR/USD slipped below 1.0550 as traders await the European Central Bank (ECB) monetary policy on December 12.

In the meantime, EUR/USD traders are eyeing the release of the Consumer Price Index (CPI) in the US ahead of the ECB’s decision. Lagarde and Co. are widely expected to lower borrowing costs; the odds stand at a 100% chance, with the swaps market expecting 28 basis points (bps) of easing.

Data-wise, Germany revealed the Harmonized Index of Consumer Prices (HICP), which came steadily at 2.4% YoY in headline figures as expected. The month-over-month figures remained at -0.7%, unchanged and as foreseen by analysts, an indication that inflation continues to edge lower.

EUR/USD Price Forecast: Technical outlook

The EUR/USD has a neutral downward bias after registering lower lows for the last two days, indicating that bears remain reluctant to give bulls any chance of recovery. Momentum, as measured by the Relative Strength Index (RSI), confirms that thesis, as the RSI edges lower yet is shy of clearing the latest trough.

If EUR/USD clears 1.0500, the next support would be the December 2 low of 1.0460, followed by the yearly low of 1.0331. On the other hand, if buyers drive spot prices above 1.0600, this will clear the path for a recovery, but bulls must clear 1.0700 before challenging the 50-day Simple Moving Average (SMA) at 1.0727.

The Euro (EUR) is softer, slipping back to the low 1.05s after failing to hold gains through the low 1.06s late last week, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR drifts lower

“A 1/4-point cut is fully priced in for Thursday’s ECB policy decision and while the EUR may drift a little further ahead of the meeting, spot is trading close to fair value (1.0549) this morning, suggesting that there may be little scope for significant losses in the short run unless the ECB springs a dovish surprise and eases policy more aggressively than markets are positioned for.”

“The EUR’s failed attempt to push through technical resistance around 1.06 suggests a period of softer trading ahead. Spot losses through 1.0540 imply some scope for additional weakness in the short run at least. EUR support is 1.0470/75. Resistance is 1.0540/50.”

Euro (EUR) traded little changed, was last seen at 1.0532 levels. This week, EUR may continue to see more volatility because of the political risks in Germany and the upcoming ECB meeting on Thursday, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Classic inverted head & shoulders pattern on charts

“Daily momentum is mild bullish but rise in RSI slowed. Price pattern shows a classic formation of an inverted head & shoulders pattern, which is typically associated with a bullish reversal. Neckline comes in at 1.0610/20 levels. Break-out puts 1.0670 (38.2% fibo) within reach before next resistance comes in at 1.0750/75 levels (50 DMA, 50% fibo). Support at 1.0460 levels.”

“On Wednesday, German Chancellor Scholz is expected to call for a vote of confidence and the Bundestag will vote next Monday on 16 Dec. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. But in the event, he fails, then Germany is likely to make way for elections on 23 Feb 2025. Far right AfD is calling for Germany to leave the European Union, the EUR and Paris climate deal as the party prepares for early elections in Feb-2025. The concern here is the explicit language to quit EU unlike its manifesto ahead of the European parliament elections previously in Jun-2024.”

“On Thursday, ECB meeting takes centre stage. Markets have already reduced bets for 50bp cut and is now pricing just a 25bp cut. OIS-implied has also priced in back-to-back cuts for 1H next year, taking rates to below 2% in Jun 2025, or even 1.75% in July. This may have been overdone. While political risks in Europe may still weigh on EUR, but we had also flagged that many EUR negatives, such as slowing growth momentum, political fallout, aggressive ECB cut expectations, etc. are already in the price. We still do not rule out the risk of EUR short squeeze in the short term.”

• EUR/USD drops to near 1.0530 as investors await key events including US inflation and the ECB policy meeting.
• The ECB is widely anticipated to cut its Deposit Facility Rate by 25 bps to 3% on Thursday.
• Economists expect US annual core CPI to have grown steadily by 3.3% in November.

EUR/USD slides to near 1.0530 in Tuesday’s European session as investors turn cautious ahead of the European Central Bank (ECB) monetary policy meeting, which will be announced on Thursday. Traders have priced in a 25-basis points (bps) reduction in the Deposit Facility Rate to 3%. This would be the third interest rate cut decision by the ECB in a row.

Market experts assume that a slew of factors, including Donald Trump’s victory in the United States (US) Presidential elections, political turmoil in France and Germany, and a sharp slowdown in the Eurozone business activity compelled financial market participants to factor in an interest rate reduction in the policy meeting on Thursday.

The fallout of the government in France and instability in Germany and France could have a direct impact on the Eurozone economic growth, which will weigh on price pressures, as these two are the largest economies of the trading bloc. The impact of Trump’s tariffs on Eurozone inflation when he reaches the White House is still uncertain.

ECB policymakers are divided over whether the impact of Trump tariffs will be inflationary or deflationary on the Eurozone economy. A handful of ECB policymakers assume that Trump’s tariffs will weaken the Euro (EUR) against the USD significantly, a scenario that will make imports costlier for individuals and boost price pressures. On the contrary, a few officials forecast risks of inflation undershooting the bank’s target as higher tariffs will dampen the Eurozone’s export sector.

Daily digest market movers: EUR/USD drops with US inflation in focus

• EUR/USD drops as the US Dollar (USD) rises, with investors awaiting the US Consumer Price Index (CPI) data release for November, which is scheduled for Wednesday. The inflation report is expected to show that the annual headline CPI rose at a faster pace of 2.7% from the prior release of 2.6%. The core CPI – which excludes volatile food and energy prices – is expected to rise steadily by 3.3%.
• The inflation data is less likely to influence Federal Reserve (Fed) interest rate expectations for the policy meeting on December 18 unless the data deviates from expectations significantly.
• According to the CME FedWatch tool, the probability for the Fed to reduce interest rates by 25 bps to 4.25%-4.50% is almost 90%. Analysts at Macquire agree with Fed rate cut market expectations for next week but expect the central bank to deliver a slightly hawkish interest rate guidance. 
• “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,” analysts at Macquarie said.

Technical Analysis: EUR/USD holds key support of 1.0500

EUR/USD wobbles above the psychological figure of 1.0500. The outlook of the major currency pair remains bearish as the 20-day EMA near 1.0573 acts as key resistance for the Euro (EUR) bulls.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the broader bearish trend for the pair doesn’t seem to be over yet.

Looking down, the November 22 low of 1.0330 will be a key support. On the flip side, the 50-day EMA near 1.0700 will be the key barrier for the Euro bulls.

Further sideways trading in Euro (EUR) seems likely, probably between 1.0525 and 1.0585. In the longer run, EUR has to break and remain above 1.0610 before further advance to 1.0650 is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Further sideways trading in EUR seems likely

24-HOUR VIEW: “After EUR rose to 1.0629 last Friday, and then pulled back, we indicated yesterday that ‘upward pressure appears to have eased.’ We were of the view that EUR ‘may trade sideways between 1.0530 and 1.0590.’ Our view was not wrong, even though EUR traded in a slightly wider range of 1.0531/1.0594, closing at 1.0552 (-0.15%). Further sideways trading seems likely today, probably between 1.0525 and 1.0585.”

1-3 WEEKS VIEW: “Our update from last Friday (06 Dec, spot at 1.0585) remains valid. As indicated previously, EUR ‘has to break and remain above 1.0610 before further advance to 1.0650 is likely.’ On the downside, should EUR break below 1.0500 (no change in ‘strong support’ level), it would mean that the likelihood of EUR breaking clearly above 1.0610 has faded. Looking ahead, the next level to watch above 1.0610 is 1.0650.”

• EUR/USD gains ground to near 1.0560 in Tuesday’s early European session. 
• The negative view of the pair prevails below the 100-day EMA with a bearish RSI indicator. 
• The first downside target to watch is 1.0480; the immediate resistance level emerges at 1.0623.

The EUR/USD pair trades in positive territory around 1.0560 during the early European session on Tuesday. However, the upside for the major pair seems limited amid the rising bets for additional reductions by the European Central Bank (ECB) on Thursday. 

The ECB is widely expected to announce a 25-basis point (bps) rate cut at its December meeting on Thursday, though an unusual 50 bps reduction remains possible. Market players will monitor ECB President Christine Lagarde’s press conference after the monetary policy meeting as it might offer some hints about future policy direction and the potential timeline for additional rate cuts.

Technically, EUR/USD keeps the bearish vibe on the daily chart as the major pair remains capped below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is supported by the 14-day Relative Strength Index (RSI), which is located below the midline around 45.20, indicating that the path to the least resistance level is to the upside. 

The initial support level for the major pair emerges at 1.0480, the low of December 3. Any follow-through selling below the mentioned level could expose the lower limit of the Bollinger Band at 1.0445. Extended losses could push prices lower toward 1.0332, the low of November 22. 

On the upside, the first upside barrier is seen near the upper boundary of the Bollinger Band at 1.0623. Sustained bullish momentum could see a rally to 1.0787, the 100-day EMA. Further north, the next hurdle to watch is the 1.0800 psychological level.  

EUR/USD daily chart

• EUR/USD shed barely a tenth of a percent on Monday.
• Despite limited movement, Fiber eased back from 1.0600.
• US CPI inflation, ECB rate call in the barrel for the mid-week.

EUR/USD trimmed its stance slightly on Monday, easing back away from the 1.0600 handle after facing a technical rejection from the key level last week. Euro traders are buckling down for a long wait to Thursday’s rate call from the European Central Bank (ECB), with Greenback bidders awaiting a fresh round of US Consumer Price Index (CPI) inflation updates due on Wednesday.

The front half of the trading week is a sedate showing for the Euro as ECB rate cut clouds gather in the distance. The pan-EU Sentix Investor Confidence survey for December fell to a 13-month low of -17.5, keeping Euro bulls at bay. The ECB is broadly expected to reduce both its Main Refinancing Operations Rate and Rate on Deposit Facility by 25 bps each on Thursday.

The Federal Reserve (Fed) Bank of New York released its latest summary of consumer survey results during Monday’s American market session, noting that US consumers are riding a tricky line with their economic expectations. According to the NY Fed, US consumers expect a suddenly-improved financial situation for themselves and the federal government, with respondents reporting a sea change in their expectations to afford debt and credit conditions following the re-election of former US President Donald Trump. The same pool of respondents also sharply reduced their expectations for future government borrowing levels.

Further complicating the matter for US consumers, the NY Fed’s survey revealed that the same body of surveyed consumers also raised their expectations of future inflation again, with the average respondent expecting inflation to reaccelerate to 3.0% by next November. 

US session traders will be looking ahead to a fresh print of US Consumer Price Index (CPI) inflation slated for Wednesday, with a thin docket on the offering for the early week. US CPI inflation is expected to tick up again on an annualized basis in November. Median market forecasts expect Wednesday’s US CPI inflation to rise to 2.7% YoY compared to October’s 2.6%.

EUR/USD price forecast

The EUR/USD daily chart depicts a bearish medium-term trend as the pair remains firmly below its 50-day EMA at 1.0703 and 200-day EMA at 1.0828. Following the sharp drop in mid-November that led to a multi-month low near 1.0450, the pair has entered a consolidation phase. Resistance at 1.0600–1.0650, which aligns with prior swing lows and the descending 50-day EMA, has capped recent upside attempts. On the downside, 1.0450 stands as a critical support level, guarding against a deeper decline.

The most recent candle reflects indecision, closing near 1.0554 after testing both lower and upper levels within a narrow range. The inability to sustain gains above the 1.0600 psychological level underscores persistent selling pressure. A bearish bias remains intact unless the pair clears the 50-day EMA, which would open the door to retesting the 1.0700 zone. Conversely, a break below the 1.0500 mark could accelerate downside momentum, paving the way for a revisit of the 1.0450 support and potentially lower.

The MACD indicator has started to turn slightly positive, as the histogram trends upward, suggesting that bearish momentum is fading. However, the MACD line remains below the signal line, indicating that the overall trend has yet to shift convincingly. A breakout above 1.0600 with increasing bullish momentum would be a critical development for buyers, while failure to do so keeps the pair vulnerable to further downside, aligning with the broader bearish trend.

EUR/USD daily chart

• EUR/USD gains mildly on Monday, trading at 1.0585 after rebounding from the 20-day SMA.
• Pair maintains its position above the 20-day SMA, supporting a constructive short-term outlook.
• RSI points upward but remains below 50, while MACD prints rising green bars, signaling gradual bullish momentum.

The EUR/USD pair is showing mild gains on Monday, climbing to 1.0585 after finding support at the 20-day Simple Moving Average (SMA). This rebound reinforces the importance of the 20-day SMA as a key level, with the pair maintaining a slightly positive short-term outlook.

Technical indicators suggest improving momentum. The Relative Strength Index (RSI) is pointing upward but remains below the neutral 50 mark, indicating a cautious recovery. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator continues to print rising green bars, highlighting building bullish momentum, though a decisive breakout remains elusive.

To extend the recovery, EUR/USD needs to clear resistance at 1.0600, which would confirm further upside potential. On the downside, the 20-day SMA near 1.0550 serves as a crucial support level. A break below this could see the pair revisiting 1.0530 and, subsequently, the psychological 1.0500 level.

EUR/USD daily chart

The Euro (EUR) has picked up a little support in the low/mid-1.05s following the chop seen around Friday’s US NFP data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR holds with Friday’s intraday range

“Failure to hold and extend gains above 1.06 likely means a more cautious, range-bound trading environment for the EUR in the short run as attention switches to Thursday’s ECB policy decision and the latest ECB staff forecasts which may shape market expectations about the pace of expected rate easing into 2025.”

“The EUR has attracted firm support through European trade but is only just about finding its way back to the mid-point of the range that developed through Friday’s choppy session. The failed push above 1.06 last week may become a drag on the EUR’s near-term outlook if the market is unable to regain that point quickly. Support is 1.0525. Resistance is 1.06 and 1.0650.”

• EUR/USD juggles near 1.0500 as investors await US CPI data for November and the ECB policy meeting.
• Investors expect the ECB to cut interest rates by 25 bps for the third time in a row.
• Fed Goolsbee forecasts the central bank to reach the neutral rate by the end of 2025.

EUR/USD consolidates around 1.0550 in Monday’s European session with investors focusing on the European Central Bank (ECB) monetary policy decision on Thursday. Markets are almost fully pricing in that the ECB will cut its Deposit Facility Rate by 25 basis points (bps) to 3% as many officials have shown concerns over risks of inflation undershooting the bank’s target due to the weak economic outlook.

The ECB has already reduced the deposit rate by 75 bps this year and Thursday’s rate-cut decision would be the third in a row.

Market participants expect the Eurozone economy to underperform amid political uncertainty in Germany and France, which are the largest nations of the bloc. The potential impact on the export sector when US President Donald Trump takes the administration at the White House is also a source of concern.

The French economy is going through a tough phase, and the outlook became gloomier after the government was toppled by lawmakers. Last week, Michel Barnier became the shortest-serving French prime minister after losing a no-confidence vote from the Far Right and the Left-Wing parties over his fiscal plans. French President Emmanuel Macron said that he will find a successor for Barnier “in the coming days.”

Daily digest market movers: EUR/USD consolidates amid firm Fed dovish bets

• EUR/USD trades sideways as the US Dollar (USD) struggles amid firm expectations that the Federal Reserve (Fed) will cut its key borrowing rates in its policy meeting on December 18. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, surrenders its gains generated in the Asian session and struggles to hold the key support of 106.00.
• According to the CME FedWatch tool, the probability for the Fed to cut interest rates by 25 bps to 4.25%-4.50% on December 18 has increased to 87% from 62% a week ago. Fed dovish bets escalated after the United States (US) Nonfarm Payrolls (NFP) report for November showed higher-than-expected hiring numbers.
• For the longer-term outlook on interest rates, Chicago Fed President Austan Goolsbee said on Friday that expects the central bank to reach the median rate by the end of next year. Goolsbee didn’t provide a specific number for the neutral rate but specified that a level around 3%, which is roughly the median that Fed officials projected as a stopping point at their September meeting, “doesn’t seem crazy.”
• This week, investors will focus on the US Consumer Price Index (CPI) data for November, which will be released on Wednesday. Economists expect the annual headline CPI to have accelerated to 2.7% from the October reading of 2.6%, with the core CPI – which excludes volatile food and energy items – growing steadily by 3.3%.

Technical Analysis: EUR/USD stays above 1.0500

EUR/USD wobbles above the psychological figure of 1.0500. The outlook of the major currency pair remains bearish as the 20-day EMA near 1.0580 acts as key resistance for the Euro (EUR) bulls.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and has climbed above 40.00, suggesting that the bearish momentum has faded. However, the broader bearish trend for the pair doesn’t seem to be over yet.

Looking down, the November 22 low of 1.0330 will be a key support. On the flip side, the 50-day EMA near 1.0700 will be the key barrier for the Euro bulls.

ECB meets on Thursday. Pair was last at 1.0564 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Germany comes into focus this week

“Markets have already reduced bets of 50bp cut and is now pricing just a 25bp cut. But politics may steal the show from ECB. Germany will come into focus this week. Chancellor Scholz is expected to call for a vote of confidence on 11 December (Wednesday) and the Bundestag will vote next Monday on 16 December. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes.”

“But in the event, he fails, then Germany is likely to make way for elections on 23 February 2025. Political risks in Europe may still weigh on EUR, but we had also flagged that many EUR negatives, such as slowing growth momentum, political fallout, ECB cut expectations, etc. are already in the price. We still do not rule out the risk of EUR short squeeze in the short term.”

“Daily momentum is mild bullish but rise in RSI slowed. Price pattern shows a classic formation of an inverted head & shoulders pattern, which is typically associated with a bullish reversal. Neckline comes in at 1.0610/20 levels. Break-out puts 1.0670 (38.2% fibo) within reach before next resistance comes in at 1.0750/75 levels (50 DMA, 50% fibo). Support at 1.0540/50 levels (23.6% fibo, 21 DMA), 1.0460 levels.”

Upward pressure appears to have eased; the Euro (EUR) may trade sideways between 1.0530 and 1.0590. In the longer run, EUR has to break and remain above 1.0610 before further advance to 1.0650 is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

May trade sideways between 1.0530 and 1.0590

24-HOUR VIEW: “EUR soared to 1.0589 last Thursday. On Friday, we highlighted that ‘strong momentum points to further EUR strength.’ However, we highlighted that, ‘it remains to be seen if it can break clearly above the major resistance at 1.0610.’ Although EUR rose more than expected to 1.0629, it pulled back quickly from the high, closing lower by 0.17% at 1.0568. Upward pressure appears to have eased, and today, EUR may trade sideways, most likely between 1.0530 and 1.0590.”

1-3 WEEKS VIEW: “After EUR soared to 1.0589 last Thursday, we indicated on Friday (06 Dec, spot at 1.0585) that it ‘has to break and remain above 1.0610 before further advance to 1.0650 is likely.’ Although EUR broke above 1.0610 during NY trading session, it was unable to hold on to its gains, pulling back to close at 1.0568, lower by 0.17% for the day. There is still a chance for EUR to break and remain above 1.0610, as long as 1.0500 (no change in ‘strong support’ level from last Friday) is not breached. Looking ahead, the next level to watch above 1.0610 is 1.0650.”

Friday's US jobs report was not weak enough for EUR/USD to sustain a move over 1.06. Rate spreads have become a little more supportive for EUR/USD, ING’s FX analyst Chris Turner notes.

Few reasons for the ECB to be cheerful right now

“The highlight this week will be Thursday's European Central Bank meeting. A 25bp cut is probably more likely now, although the press conference could potentially open the door to sub-neutral (i.e., less than 2.00%) policy rates next year. There certainly seem few reasons for the ECB to be cheerful right now, even though the hard data is holding up better than expected.”

“After heavy losses in October and November, EUR/USD has since enjoyed two weeks of consolidation. It now looks like time for the bear trend to get going again. And despite seasonal trends which are normally EUR/USD supportive in December, we favour EUR/USD drifting back to 1.0500/0520 short-term and potentially breaking lower in the week should US CPI data or the ECB meeting have something for EUR/USD bears like ourselves.”

• EUR/USD loses traction to around 1.0550 in Monday’s Asian session.
• Markets see a potential December rate cut by the Fed. 
• The ECB is anticipated to cut another 25 bps at its December meeting on Thursday.

The EUR/USD pair trades with a mild negative bias near 1.0550 on Monday during the Asian trading hours. Investors will closely monitor the US Consumer Price Index (CPI) inflation report for November, which is due on Wednesday. On Thursday, the European Central Bank (ECB) interest rate decision will take center stage. Investors will be looking for clues about what comes next.

The expectation of a quarter-point rate cut by the Federal Reserve (Fed) on December 18 grew last week after the employment report showed strong job creation, but not at a pace that would necessarily deter Fed officials from lowering rates to between 4.25 and 4.5% from their current range of 4.5 to 4.75%. 

With hopes high for a US interest rate cut later this month, inflation data on Wednesday could serve as the one remaining potential stumbling block to a third successive rate cut from the Fed. The annual consumer price inflation is expected to rise to 2.7% YoY in November from 2.6% in October. Core inflation, which excludes volatile food and energy prices, is projected to be steady at 3.3% YoY in November. 

The European Central Bank (ECB) is expected to deliver its fourth interest rate cut of the year at its final policy meeting of 2024 on Thursday. Analysts expect the ECB to stick to its data-dependent guidance by reiterating that it “is not pre-committing to a particular rate path.” However, the ECB President Lagarde’s press conference could offer some hints about the interest rate outlook. Any dovish remarks from ECB policymakers could weigh on the Euro (EUR) against the US Dollar. 

• EUR/USD gives up gains on Friday, settling near 1.0550 after reaching 1.0600.
• Pair remains above the 20-day SMA, keeping the short-term outlook slightly positive.
• RSI stays flat in negative territory, while MACD shows rising green bars, hinting at bullish momentum.

The EUR/USD pair retreated on Friday after briefly testing highs around 1.0600, ending the session near 1.0550 but still holding above the 20-day Simple Moving Average (SMA). This level continues to provide critical support, suggesting that the short-term outlook remains somewhat constructive despite Friday's pullback.

Technical indicators present mixed signals. The Relative Strength Index (RSI) remains points in negative territory, reflecting caution among traders. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator prints rising green bars, signaling gradual bullish momentum. However, the lack of a decisive move higher underscores lingering risks for the pair.

On the upside, the pair faces immediate resistance at 1.0580, with a clear break above the 1.0600 psychological level needed to confirm further gains. On the downside, a sustained move below 1.0550 could open the door to retest support at 1.0530 and potentially revisit the critical 1.0500 level.

EUR/USD daily chart