CFD Trading Rate Euro vs US Dollar (EURUSD)

The Euro (EUR) continued to trade near recent lows amid political uncertainties in Europe. Pair was last at 1.0522 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum turns flat

“No-confidence vote may come as early as Wed after PM Barnier used rare constitutional powers to force a social security bill through. On Germany, 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 likely on 23 Feb-2025 (there is an explicit language here to quit EU unlike its manifesto ahead of the European parliament elections).”

“Bear in mind that Chancellor Scholz is expected to call for a vote of confidence on 11 Dec and the Bundestag will vote on 16 Dec. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. Political uncertainties in Germany and France may re-assert on EUR in the interim.”

“Daily momentum turned flat while RSI fell. Risks somewhat skewed to the downside. Support at 1.0450 levels before 1.0330. Resistance at 1.0610 (21 DMA), 1.0670 (38.2% fibo retracement of Oct high to Nov low). Week remaining brings services PMI, PPI (Wed); retail sales (Thu); 3Q GDP, employment (Fri).”    

The Euro (EUR) is unlikely to weaken further; it is more likely to trade in a 1.0470/1.0540 range. In the longer run, instead of a rebound, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR is expected to trade in a range for now

24-HOUR VIEW: “Yesterday, when EUR was at 1.0555, we stated that ‘The current price action is likely part of a lower trading range of 1.0520/1.0580.’ Our view was incorrect, as EUR plunged to 1.0459 before rebounding to close at 1.0497, down sharply by 0.74%. The rebound in deeply oversold conditions and slowing momentum indicate that EUR is unlikely to weaken further. Today, EUR is more likely to trade in a 1.0470/1.0540 range.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (28 Nov, spot at 1.0565), wherein EUR ‘could rebound further, potentially reaching 1.0650.’ EUR subsequently rebounded to 1.0597, but yesterday, in a sudden move, it plunged to a low of 1.0459. The breach of our ‘strong support’ level at 1.0490 indicates that instead of a rebound, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580.”

• EUR/USD trades in negative territory for the second consecutive day near 1.0490 in Tuesday's early European session. 
• Growing concerns about a possible government collapse in France undermine the Euro. 
• US Manufacturing PMI came in stronger than expected in November. 

The EUR/USD pair loses ground to around 1.0490 during the early European session on Tuesday. The Euro (EUR) weakens against the Greenback as a budget standoff in France fuelled concern about the Eurozone’s second-biggest economy. 

The French Prime Minister Michel Barnier's plan to pass a social security bill without a parliamentary vote has prompted opposition parties to declare their intention to vote for a no-confidence motion against Barnier. This move is likely to cause the French government to collapse this week. 

The political uncertainty in France exerts some selling pressure on the shared currency. Meanwhile, the yield spread between French and German 10-year government bonds rose 7.6 basis points (bps) to 87.3 bps after reaching 90 bps last week, its highest level since 2012. "Crashing political sentiment in France and another activity data beat in the U.S. have handed the euro a dire start to December," said Kyle Chapman, FX market analyst at Ballinger Group.

Across the pond, US economic data released on Monday showed US manufacturing activity improving in November, suggesting that the US economy remains robust, lifting the US Dollar. However, the US Federal Reserve (Fed) remains data-dependent, and the employment report due on Friday will be closely watched. The Nonfarm Payrolls (NFP) might offer some hints as to whether the Fed would cut rates again on December 18.

• EUR/USD lost ground again on Monday, skidding back into 1.05.
• Fiber failed to recapture the 1.0600 handle as near-term bounce fizzles.
• Plenty of ECB speeches dot the landscape, US NFP jobs numbers loom on Friday.

EUR/USD kicked off another trading week with a decline back into familiar near-term lows, flubbing a fresh run at the 1.0600 handle and backsliding into 1.0500, shedding nearly eight-tenths of a percent on Monday. US Purchasing Managers Index (PMI) figures beat the street but still came in below the 50.0 contraction level, bolstering the safe haven Greenback.

European economic data remains thin in the front half of the trading week, though several European Central Bank (ECB) speeches are smattered across the data docket. Another Nonfarm Payrolls (NFP) week looms over markets with US net jobs additions figures slated for Friday, and plenty of labor and wages preview data throughout the week.

US ISM Manufacturing PMI figures rose in November, climbing to a five-month high of 48.4 versus the previous 46.5, over and above the forecast 47.5. Despite the uptick in business expectation survey results, the indicator is still stuck in contraction territory below 50.0, implying the majority of business operators still see declines in overall activity in the coming months.

EUR/USD price forecast

EUR/USD is stuck in the dumps near 1.0500 after a bullish recovery fizzled. Fiber only managed to squeeze out a single green weekly candlestick after hitting multi-year lows near 1.0330. The 50-day and 200-day Exponential Moving Averages (EMA) have confirmed a bearish cross, with the 50-day EMA accelerating downward into 1.0700 as the 200-day EMA prices in a firm ceiling near 1.0840.

EUR/USD daily chart

• The EUR/USD fell by more than 1% to open the week.
• The 1.0500 mark is gone and the pair fell further below the 20-day SMA.
• Indicators suggest that the selling momentum may have more room to go.

The EUR/USD pair kicked off the week with a sharp decline, falling over 1% and decisively breaking below the psychological 1.0500 mark. This move also pushed the pair further beneath the 20-day Simple Moving Average (SMA) which has acted recently as a strong resistance.

The technical indicators align with the bearish outlook, suggesting that further downside may be in play. The Relative Strength Index (RSI) is pointing downward at 37, inching closer to oversold territory but still indicating room for more selling pressure. Meanwhile, the MACD histogram is printing lower green bars, reinforcing the view that bearish momentum is strengthening.

The break below 1.0500 and the technical indicators suggest that the pair is poised for further losses unless a significant reversal catalyst emerges. Traders will be closely watching the 1.0450 and 1.0430 levels for signs of potential stabilization or a continuation toward 1.0400.

EUR/USD daily chart

• EUR/USD declines on Monday as the French government faces a potential vote of no confidence. 
• The US Dollar strengthens due to Donald Trump’s threat to hit BRICS countries with 100% tariffs. 
• Dovish commentary from ECB’s Martin Kazaks adds to the negative sentiment around the Euro.

EUR/USD is trading over half a percent lower on Monday, with a single Euro (EUR) buying about 1.0500 US Dollars (USD) as New York awakes to the sound of alarm clocks and scent of coffee. 

The pair is falling as a political crisis threatens to overturn the French government, weighing on the Euro whilst President-elect Donald Trump gives the Dollar a boost by threatening to impose tariffs on BRICS nations unless they give up their search for an alternative to the Dollar. 

The Single Currency is depreciating as France faces a political crisis of a gravity not seen since 1962. Michel Barnier’s minority government could face a vote of no confidence as attempts to get a controversial Budget through parliament. 

Due to lacking an overall majority, Barnier relies on the backing of the French Far right National Rally (NR) party but they have demanded major concessions to the Budget, curbing the austerity of the original plan which sought to reign in government spending and narrow the country’s relatively wide deficit. 

Barnier has until Monday to yield to NR's demands or face the possibility of a no-confidence motion toppling his government.

The panic is leading international investors to steer clear of European equities, reducing demand for the Euro, according to Reuters. This, in turn, is weighing on EUR/USD. 

The US Dollar meanwhile, is rallying across the board after Donald Trump threatened the BRICS trading bloc with 100% tariffs unless it dropped the pursuit of a replacement currency.

BRICS – which includes Brazil, Russia, India, China, South Africa, Egypt, Iran, the United Arab Emirates, and Ethiopia – has been steadily reducing its reliance on the USD as a medium of exchange, using the currencies of its members instead, whilst mulling an alternative reserve currency of its own. 

“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump posted on Truth Social on Saturday afternoon. “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.  

EUR/USD faces further downside pressure after comments from European Central Bank governing council member Martins Kazaks on Monday, suggested he was in favor of making further cuts to Eurozone interest rates. 

“In my view, rate cuts must continue,” said Kazaks, adding, “we see that the inflation problem will soon end.” 

The expectation of lower interest rates is negative for the Euro since it reduces foreign capital inflows. 

• EUR/USD loses momentum to near 1.0530 in Monday’s Asian session. 
• Eurozone's inflation rose to 2.3% YoY in November. 
• The cautious stance of the Fed provides some support to the USD and acts as a headwind for EUR/USD. 

The EUR/USD pair faces some selling pressure to around 1.0530 amid the firmer US Dollar (USD) during the early Asian trading hours on Monday. Investors will closely monitor the speech by the European Central Bank’s (ECB) President Christine Lagarde and the release of the US ISM Manufacturing Purchasing Managers' Index (PMI), which is due later on Monday. 

Inflation in the Eurozone, as measured by the Harmonized Index of Consumer Prices (HICP), rose to 2.3% YoY in November from 2.0% in October, in line with market expectations. This figure overreached the ECB 2.0% target. Meanwhile, the Core HICP climbed by 2.8% YoY in November, compared to 2.7% in the previous reading, which was also in line with expectations. 

Market participants have fully priced in a 25 basis points (bps) rate cut from the ECB in December, which would signify the bank’s fourth rate reduction this year. However, expectations of a substantial 50 bps reduction have been dwindling since last month, with slight enhancements in the Eurozone’s tepid growth forecast. The expectation that the ECB will cut interest rates at their December meeting exerts some selling pressure on the Euro (EUR). 

On the other hand, the cautious stance of the US Federal Reserve (Fed) might continue to underpin the Greenback. Fed Chair Jerome Powell highlighted that “the economy is not sending any signals that we need to be in a hurry to lower rates. Powell added that “the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” The markets now see nearly a 65.4% odd that the Fed will cut rates by a quarter point in December, according to the CME FedWatch Tool.

• EUR/USD started Friday with hopeful gains, but slumped back into the low side.
• European inflation figures showed contraction on the near end of the curve.
• Core monthly HICP inflation dipped to its lowest level since February.

EUR/USD kicked Friday off with a mild rally into the 1.0600 handle as broader markets took advantage of the US holiday session to sell off the Greenback and bid up riskier assets, but another contraction in key pan-European inflation figures pulled the plug on Fiber bulls. Despite an intraday softening of the Euro’s stance, EUR/USD is poised for its first weekly gain in a month.

According to the Harmonized Index of Consumer Prices (HICP), headline European inflation sank to -0.3% in November, falling from the previous month’s 0.3%. Core HICP inflation also declined to -0.6% MoM compared to the previous print of 0.2%, sending core monthly inflation measures into contraction territory for the third time this year and the lowest print since February.

Annualized HICP inflation ticked higher, with core HICP rising to 2.8% YoY from the previous 2.7%, but the bump in yearly inflation is likely due to previous bumps in the road as the European Central Bank (ECB) grapples with whipsaw inflation prints. ECB officials noted that still-declining inflation metrics bode well for further rate cuts. Still, too-steep of an inflation easing curve is raising investor concerns of a deepening slowdown within the broader European economy.

EUR/USD price forecast

The Euro’s bullish turnaround from two-year lows is already running into trouble as intraday bidding runs aground of the 1.0600 handle. Bullish momentum has achieved a moderate 2.5% recovery from November’s bottom bids near 1.0330, but momentum remains limited. Looking higher up, a rapidly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750 while the 200-day EMA rolls over into bear country near 1.0840.

EUR/USD daily chart

• EUR/USD climbs to near 1.0580 as the US Dollar extends its correction.
• Investors await the preliminary Eurozone HICP data for November, which will influence the ECB’s likely interest rate cut size prospects.
• ECB’s Villeroy keeps hopes of an outsize interest rate cut in December on the table.

EUR/USD posts a fresh weekly high near 1.0580 in the European session on Friday ahead of the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for November, which will be published at 10:00 GMT. The inflation report is expected to show that the annual headline and core HICP – which excludes volatile food and energy prices – accelerated to 2.3% and 2.8%, respectively.

Investors will pay close attention to the inflation report to get fresh cues about the European Central Bank’s (ECB) likely interest rate cut size in the December meeting. The ECB has already reduced its Deposit Facility Rate by 75 basis points (bps) to 3.25% this year.

Traders expect the ECB to cut its key borrowing rates at least by 25 bps in the December meeting. For 2025, traders see the ECB cutting interest rates in every meeting through June, pushing the Rate on Deposit Facility lower to 1.75% by the year-end, according to Reuters.

Market speculation for the ECB to cut interest rates by a larger-than-usual size of 50 bps is upbeat as officials are worried about growing economic risks. The two largest economies of the Eurozone, Germany and France, are going through a rough phase due to political uncertainty, a scenario that slows down government spending activities.

Also, weak German Retail Sales data for October points to economic stagnation. Month-on-month Retail Sales contracted by 1.5% after rising 1.2% in September. Economists expected the Retail Sales data, a key measure of consumer spending, to decline at a slower pace of 0.3%. On year, the consumer spending measure rose by 1%, slower than estimates of 3.2% and the prior release of 3.8%.

ECB Governing Council member and Governor of Bank of France François Villeroy de Galhau kept the option of an outsize interest rate cut on the table in his speech on Thursday. “Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections, and our risk assessment,” Villeroy said.

Daily digest market movers: EUR/USD advances as US Dollar corrects further

• EUR/USD gains as the US Dollar (USD) extends its downside in a holiday-truncated week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its correction below 106.00 on Friday. The USD Index started correcting on Monday after United States (US) President-elect Donald Trump nominated Scott Bessent, a veteran hedge-fund manager, for the role of Treasury Secretary.
• Financial markets anticipated that Bessent would enact Trump’s economic agenda without disrupting external relations and fiscal discipline. “The objective of enacting tariffs will be “layered in gradually and the budget deficit will be reduced to 3% of Gross Domestic Product (GDP) by slashing spending, a move that won’t result in higher inflation than feared,” Bessent said in an interview with the Financial Times (FT) last weekend.
• On the monetary policy front, market experts expect the Federal Reserve (Fed) to be cautious about interest rate cuts as the core Personal Consumption Expenditures Price Index (PCE) data, the Fed’s preferred inflation gauge, accelerated in October. The probability that the Fed will cut interest rates by 25 bps to the 4.25%-4.50% range in the December meeting is 66%, while the rest supports leaving them unchanged, according to the CME FedWatch tool.
• In Friday’s session, the US Dollar is expected to remain sideways as US markets will open for limited hours on account of Thanksgiving holidays. For the next week, investors should brace for high volatility as a slew of employment and economic data will be published.

Technical Analysis: EUR/USD rises to near 1.0600

EUR/USD extends its upside to near 1.0580 on Friday. The recovery in the major currency pair appears to be a mean-reversion move, which could extend to near the 20-day Exponential Moving Average (EMA) around 1.0600. Still, the broader outlook would remain bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.

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 bearish trend has not been extinguished.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0747 will be the key barrier.

• EUR/USD attracts fresh buying on Friday as the USD slides to over a two-week low.
• Reduced bets for a jumbo ECB rate cut underpin the Euro and also support the pair.
• Traders now look to the flash Eurozone consumer inflation figures for some impetus.

The EUR/USD pair regains positive traction following the previous day's modest downtick and climbs back closer to the weekly top during the Asian session on Friday. Spot prices, however, remain below the 1.0600 mark, which if cleared decisively should set the stage for an extension of the recent recovery from a two-year low touched last Friday.

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This, in turn, is seen as a key factor lending support to the EUR/USD pair, though bulls seem reluctant ahead of the Eurozone consumer inflation figures. The data could offer hints on the European Central Bank's (ECB) next policy move, which, in turn, will drive demand for the shared currency and determine the next leg of a directional move for the currency pair. 

In the meantime, hawkish comments from ECB's Isabel Schnabel earlier this week, which forced investors to scale back their bets for a more aggressive easing in December, underpins the shared currency and acts as a tailwind for the EUR/USD pair. The markets, however, are still pricing in a small chance for a 50 bps rate cut next month. The expectations were lifted by the release of flash German consumer inflation figures on Thursday, which rose less than expected in November. This, in turn, warrants some caution before placing fresh bullish around the pair. 

Furthermore, expectations that US President-elect Donald Trump's expansionary policies will boost inflation and limit the scope for the Fed to cut rates further, along with geopolitical risk, might help limit losses for the safe-haven buck. This further makes it prudent to wait for strong follow-through buying and acceptance above the 1.0600 mark before positioning for an extension of the EUR/USD pair's multi-day-old uptrend. Nevertheless, spot prices remain on track to snap a three-week losing streak and end on a positive note heading into the weekend.

• EUR/USD failed to make any progress toward 1.0600, but is still holding steady.
• Holiday-thinned US markets kneecapped market volumes on Thursday.
• Shortened US hours will also trim volumes on Friday, but EU HICP inflation could spark a move.

EUR/USD churned chart paper just south of the 1.0600 handle on Thursday, failing to extend Fiber’s recent bullish recovery but not losing any ground either. Market volumes were constrained on Thursday with US markets dark for the Thanksgiving holiday, and Friday will likewise see crimped liquidity during the US session to wrap up the trading week.

A fresh batch of pan-EU inflation figures are due on Friday, which could see the Euro take a leg higher rounding the corner into the weekend, however Fiber traders have had little reason to bid EUR/USD as of late. The key figures for Fiber will be pan-EU Harmonized Index of Consumer Prices (HICP) inflation. Core HICP inflation is forecast to tick upwards to 2.8% YoY in November from the previous 2.7%, which will throw a wrench in the works for several European Central Bank (ECB) officials who have hit newswires this week trying to soothe investors with promises of further rate cuts in December and heading into 2025.

On the Greenback side, next Friday’s US Nonfarm Payrolls (NFP) jobs report, scheduled for December 6, will be the big figure to watch. Next week’s NFP will take on renewed importance for traders now that watching for signs of rate cuts from the Federal Reserve (Fed) has taken a backseat as of late. However, a large move in either direction in NFP figures could jolt Treasury rates, sparking fresh fears of either too many or too few rate cuts heading into 2025.

EUR/USD price forecast

The Euro’s much-needed bullish reprieve on Wednesday gave Fiber bulls a chance to put more distance between themselves and the pair’s latest swing low below the 1.0400, but not by much. EUR/USD is poised for a battle with the 1.0600 handle, and even a victory on the key technical level still sees further topside momentum running aground of a quickly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750.

EUR/USD daily chart

Euro (EUR) shorts continued to face the squeeze as USD, UST yield eased. Pair was last at 1.0546 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Possible EUR short squeeze near term

“Daily momentum shows signs of turning bullish RSI rose. Bullish divergence is observed on daily MACD is playing out. We continue to caution for EUR short squeeze in the near term.”

“Resistance at 1.0580, 1.0640 (21 DMA). Key support at 1.0490, 1.0450 levels before 1.03. Focus this week on Euro-area CPI (Fri). Upside surprise may aid the squeeze in EUR shorts.”

The Euro (EUR) could rise further to 1.0600 before a pause can be expected; 1.0650 is highly unlikely to come into view today. In the longer run, downward has faded, and upward momentum is building. EUR could rebound further, potentially reaching 1.0650, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR can rebound even further, potentially reaching 1.0650

24-HOUR VIEW: “Following EUR’s wide swings on Tuesday, we indicated yesterday that it ‘is likely to trade in a relatively broad range, probably between 1.0435 and 1.0535.’ However, EUR blew above 1.0535 and soared to a high of 1.0587. Although the rapid surge seems overdone, there is no indication of momentum loss just yet. EUR could continue to rise to 1.0600 before a pause can be expected. The major resistance at 1.0650 is highly unlikely to come into view today. Support is at 1.0545; a breach of 1.0520 would mean that EUR is not rising further.”

1-3 WEEKS VIEW: “We have held a negative view in EUR since one week ago. As we tracked the decline, we emphasised on Monday (25 Nov, spot at 1.0475) that ‘while the weakness in EUR remains intact, it must break and remain below last Friday’s low of 1.0333 before further decline can be expected.’ Yesterday (27 Nov, spot at 1.0490), we noted that ‘downward momentum appears to be slowing, and the likelihood of EUR breaking below 1.0333 is decreasing.’ EUR subsequently soared and broke above our ‘strong resistance’ level of 1.0560, reaching a high of 1.0587. Not only has downward momentum faded, but upward momentum is also beginning to build. We view the current price action as part of a rebound that could potentially reach 1.0650. On the downside, should EUR break below 1.0490 (‘strong support’ level), it would mean that the buildup in momentum has eased.”

• EUR/USD falls as the US Dollar steadies in a thin-trading weekend due to holidays in the US on account of Thanksgiving Day.
• ECB Schnabel ruled of risks of inflation undershooting ECB’s target.
• Investors await the German HICP data for fresh ECB interest rate guidance.

EUR/USD ticks down on Thursday as the US Dollar (USD) steadies after a weak Wednesday. However, the near-term outlook of the Euro (EUR) has slightly improved after less-dovish remarks from European Central Bank (ECB) board member Isabel Schnabel in her interview with Bloomberg on Wednesday.

Schnabel pushed back expectations of an aggressive policy-easing cycle as she doesn’t see any risk of inflation undershooting the bank’s target. She argued that the central bank stimulus doesn’t address structural issues that the Eurozone is currently facing.

For more cues on the ECB interest rate path, investors will focus on the flash November’s Harmonized Index of Consumer Prices (HICP) data of Spain, Germany, and its six major states, which will be published in Thursday’s session. German HICP is estimated to have accelerated to 2.6% from 2.4% in October on year. Month-on-month HICP is expected to have deflated by 0.5%.

Meanwhile, fears of a potential decline in Eurozone exports due to the imposition of hefty tariffs by US President-elect Donald Trump have slightly eased, which could offer more support to the Euro. ECB President Christine Lagarde said in an interview with the Financial Times (FT) in the early European session on Thursday, “Trump's lack of specificity on a level of potential European tariffs may signal that he is open to negotiation,” according to MACE News. Lagarde added, “It's difficult to make America great again if global demand is falling due to trade tariffs.”

Daily digest market movers: EUR/USD edges lower as US Dollar gains temporary ground

• EUR/USD drops to near 1.0550 in the European trading session on Thursday after posting a fresh weekly low near 1.0590 on Wednesday. The major currency pair faces pressure as the US Dollar (USD) manages to gain temporary ground in a thin volume trading day amid a long weekend in the United States (US) economy on account of Thanksgiving Day.
• The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, discovers an interim cushion around 106.00 on Thursday after a sharp downside move on Wednesday. The Greenback will be influenced by market expectations for the Federal Reserve’s (Fed) likely interest rate action in the December meeting as the US economic calendar has nothing to offer.
• Traders see a 66% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50% next month, according to the CME FedWatch tool. Fed rate cut prospects remain firm even though the US Personal Consumption Expenditure Price Index (PCE) data for October grew expectedly. Annual core PCE Price Index, a Fed’s preferred inflation gauge – which excludes volatile food and energy prices – rose by 2.8%, faster than 2.7% in September.

Technical Analysis: EUR/USD strives to revisit 20-day EMA

EUR/USD drops after failing to extend Wednesday’s rally above the round-level resistance of 1.0600. The recovery in the major currency pair appears to be a mean-reversion move, which could extend to near the 20-day Exponential Moving Average (EMA) around 1.0600. Still, the broader outlook would remain bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.

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 bearish trend has not been extinguished.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0750 will be the key barrier for the Euro bulls.

• EUR/USD struggles as the US Dollar advances due to increasing caution surrounding the Fed’s rate cut decision in December.
• The stronger US PCE data indicated a solid growth in consumer spending in October.
• Eurozone HICP headline and core inflation are projected to show annualized increases in November.

EUR/USD edges lower to near 1.0550 during the Asian trading hours on Thursday. This downside of the pair could be attributed to the improved US Dollar (USD) amid the cautious mood surrounding the Federal Reserve’s (Fed) interest rate decision in December, following Wednesday's robust inflation data. Markets may witness thin trading due to the US Thanksgiving holiday.

This latest US inflation report indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert. The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month.

According to the CME FedWatch Tool, futures traders are now pricing in a 68.1% chance that the Fed will cut rates by a quarter point in December, up from 59.4%, a day ago. Nonetheless, they anticipate the Fed leaving rates unchanged at its January and March meetings.

The Euro (EUR) faces a bearish outlook as European Central Bank (ECB) policymakers express concerns about the Eurozone's current and future economic growth. A rate cut from the ECB in December appears highly likely, though the market remains divided on the expected size of the reduction.

Traders are now turning their attention to Friday's release of the Eurozone Harmonized Index of Consumer Prices (HICP) inflation data. Preliminary figures for both headline and core inflation in November are projected to show annualized increases, which could heighten investor unease.

• EUR/USD bounced back toward the 1.0600 handle on Wednesday.
• Markets have stepped away from broad Greenback bidding pressure.
• Volumes and trading flows set to be crimped through the rest of the week.

EUR/USD caught a broad-market bid on Wednesday, taking a new run at the 1.0600 handle during the midweek market session. Fiber’s bullish rebound was due mostly to investors broadly taking a step out of recent Greenback buying pressure, rather than any instrinsic strength within the Euro itself.

Wednesday’s data docket was entirely one-sided, delivering a wide chunk of US economic figures before US markets shutter exchanges for the Thanksgiving holiday on Thursday, to be followed by shortened trading hours on Friday. Annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter, to no one's surprise and barely moving the needle on investor pulses. Core Personal Consumption Expenditure Price Index (PCEPI) accelerated to 2.8% for the year ended in October, also meeting expectations. While upticks in inflation metrics generally bode poorly for market expectations of future rate cuts, the move upward was widely expected, and a hold in monthly figures at 0.3% MoM helped to frame the bump in the data as being in the rear-view mirror.

Fiber traders will be looking toward Friday’s preliminary pan-EU Harmonized Index of Consumer Prices (HICP) inflation data, with equal parts hope and despair. Pan-EU inflation is broadly forecast to tick higher in the near term, which will further cripple the European Central Bank (ECB) even further as ECB policymakers struggle to find the words to bolster investor confidence in the lopsided European economy.

EUR/USD price forecast

The Euro’s much-needed bullish reprieve on Wednesday gave Fiber bulls a chance to put more distance between themselves and the pair’s latest swing low below the 1.0400, but not by much. EUR/USD is poised for a battle with the 1.0600 handle, and even a victory on the key technical level still sees further topside momentum running aground of a quickly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750.

EUR/USD daily chart

• EUR/USD rises 0.81% to 1.0574, recovering from recent losses, after ECB’s Isabel Schnabel urges caution on accommodative monetary policy.
• US Durable Goods Orders for October beat expectations but missed forecasts for a larger gain, up 0.2% MoM.
• US GDP growth for Q3 rose to 2.8%, in line with expectations, but down from Q2’s 3% growth.

The Euro recovered against the Greenback in the mid-North American session due to hawkish comments by European Central Bank (ECB) member Isabel Schnabel, who said the ECB should not be accommodative on rates. Therefore, the EUR/USD climbed by 0.81% and trades at 1.0574.

EUR/USD gains 0.81% to 1.0574, bolstered by ECB comments

US data failed to underpin the Greenback, which appreciated some 5.50% against the Euro, since the elections. US Durable Goods Orders for the month of October came at 0.2% MoM, exceeding September’s figures, yet missed estimates for a 0.5% expansion. Other data showed that the US Gross Domestic Product (GDP) in its second estimate was 2.8%, as expected, below the second quarter's 3% growth.

At the same time, the US Department of Labor announced that Initial Jobless Claims for the week ending November 23, rose by 213K, unchanged from the previous reading and missed estimates of 217K.

In the meantime, the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, was unchanged at 2.8% YoY, up from the previous reading of 2.7%.

Earlier, Germany’s Gfk Consumer Climate index plummeted by -23.3 in November, below estimates. The institute mentioned that consumers have a sharp decline in income expectations and some decline in the willingness to buy, in contrast to an increase in the desire to save

EUR/USD Price Forecast: Technical outlook

The EUR/USD downtrend remains intact, yet price action during the last three days edged higher, an indication that it is not finding acceptance at around the 1.03-1.04 figure. If the pair extends its gains past the November 20 high of 1.0609, buyers could test the 1.0700 figure. Otherwise, a drop beneath 1.0500 could lead to bears challenging the 1.0400 mark.

The Euro (EUR) is moderately higher on the session, with gains retesting recent peaks around 1.0540 before easing, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR firmer on hawkish Schnabel comments

“Hawkish comments from ECB Governor Schnabel that the central bank needed to be cautious about cutting rates too far as policy is nearing neutral helped give the EUR a lift.”

“The EUR may gain a little more in the near term as positioning is lightened up around the US Thanksgiving break but scope for significant gains remains limited. My fair value estimate for EURUSD is little changed today at 1.0427.”

“EUR gains from last week’s low continue to pressure the mid-1.05 area after breaking above minor trend resistance off the early November high around 1.09. Moderate gains may extend a little further towards the 1.0600/50 zone if a clear push above 1.0550 develops.”

• EUR/USD rises as the US Dollar posts a fresh weekly low ahead of a slew of US economic data.
• The optimism over Bessent maintaining fiscal discipline keeps the US Dollar under pressure.
• ECB’s Centeno warned about the risk of price pressures remaining below the bank’s target.

EUR/USD jumps higher to near 1.0530 in Wednesday’s European session. The major currency pair strengthens as the US Dollar (USD) tumbles ahead of a string of United States (US) economic data such as the Personal Consumption Expenditure Price Index (PCE), Durable Goods Orders, and Personal Spending data for October, revised Q3 Gross Domestic Product (GDP) growth estimates, and Initial Jobless Claims data for the week ending November 22, which will be published in the North American session. 

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh weekly low near 106.35. The Greenback has corrected lately after posting a fresh two-year high at around 108.00 on Friday. The correction was triggered after Scott Bessent, a veteran hedge fund manager, said that the objective of enacting tariffs will be “layered in gradually and the budget deficit will be reduced to 3% of Gross Domestic Product (GDP) by slashing spending,” a move that won’t result in high inflation than feared. The comments from Bessent came after US President-elect Donald Trump nominated him for Treasury Secretary. 

Within the array of US data, investors will pay close attention to the PCE inflation, the Federal Reserve’s (Fed) preferred inflation measure for decision-making on policy rates. The PCE report is expected to show that the headline inflation accelerated to 2.3% year-over-year in October from 2.1% a month earlier. 

In the same period, the core PCE – which excludes volatile food and energy prices – is estimated to have risen by 2.8%, stronger than the former release of 2.7%. The month-on-month headline and core PCE are expected to have grown steadily by 0.2% and 0.3%, respectively.

The US PCE inflation data will influence Fed interest rate cut prospects for the December meeting. On Monday, Minneapolis Fed Bank President Neel Kashkari said it is reasonable to consider another interest rate reduction in the December meeting. His viewpoint of an interest rate cut next month was backed by expectations that inflation is gently trending down and the labor market remains strong right now.

Daily digest market movers: EUR/USD gains despite ECB officials worry about Eurozone economic growth

• EUR/USD gains at the US Dollar’s expense on Wednesday. However, the outlook of the Euro (EUR) is downbeat as European Central Bank (ECB) policymakers have grown nervous over the Eurozone’s current and forward economic growth. 
• On Tuesday, ECB policymaker and Portuguese central bank chief Mario Centeno warned that the economy was stagnating and "risks are accumulating downwards," with tariffs threatened by Trump a further downside risk. When asked about his outlook on the monetary policy, Centeno warned about the risk of inflation undershooting the bank's target and advised not to leave rate cuts too late.
• An interest rate reduction from the ECB is almost certain in the December meeting, however, market participants are mixed about the likely rate cut size. “The view here remains there is no fiscal calvary coming in the eurozone and that the only way to address the current malaise is for the European Central Bank to cut rates more quickly than usual. The market now prices 37bp of a 50bp ECB cut in December and short-dated US; eurozone spreads remain very wide at 190bp,” analysts at ING said in a note.
• For fresh guidance on the interest rate path, investors will focus on the flash November Harmonized Index of Consumer Prices (HICP) data for the Eurozone and its major economies, which will be published on Thursday and Friday. 

Technical Analysis: EUR/USD rises above 1.0500

EUR/USD jumps above the psychological figure of 1.0500 in European trading hours on Wednesday. The major currency pair continues to hold the near-term low of 1.0330. However, the outlook remains bearish as all short-to-long-term day Exponential Moving Averages (EMAs) in the daily chart are declining, pointing to a downside trend.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold. However, the oscillator has cooled down, which could allow bears to take charge again.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the November 20 high round 1.0600 will be the key barrier.