EUR/USD: Heavy downwards bias – OCBC
12.11.2024, 08:38

EUR/USD: Heavy downwards bias – OCBC

The Euro (EUR) continued to trade lower, in line with our caution that EUR may bear the brunt of the US election outcome. Pair was last seen at 1.0623 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is bearish

“Trump presidency will result in shifts in US foreign, trade policies. The potential 20% tariff (if implemented) can hurt Europe where growth is already slowing, and that US is EU’s top export destination. EU-UST yield differentials have already widened and may widen further as markets speculate on a dovish ECB. In Germany, there is risk that the current government may be falling.”

“Chancellor Scholz dismissed Finance Minister and called for confidence vote on 15 Jan 2025. In terms of US foreign policy, military aid to Ukraine may dwindle when Trump takes over. He has on many occasions in the past said his priority is to end the war and stop what he described as a drain on US resources. Europe will have to take responsibility for its security and that would mean increasing defense spending – possibly adding to fiscal burden for some EU nations.”

“Daily momentum is bearish while RSI fell. Support at 1.06 levels (2024 low). Breach below this support will open way for further downside towards 1.0450/1.05 levels. Resistance at 1.0740 (76.4% fibo), 1.0810/30 levels (21 DMA, 61.8% fibo retracement of 2024 low to high).”

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