Created on December 11, 2024

• As previously anticipated, the EUR/USD pair remains under downward pressure near and below the psychological support level of 1.0500.
• This is pending the reaction of financial markets and investors to the announcement of US inflation figures today, which will directly impact market expectations for the future of US Federal Reserve policies.
• Tomorrow, the important European Central Bank announcement will take place.

US Inflation Expectations

The most important data in today’s economic calendar. The announcement of the US consumer price index readings, and the index is expected to rise for the fourth consecutive month. The core CPI reading – without food and energy prices – is expected to record 0.3 percent. With the announcement of consumer prices and the announcement of US producer prices later this week, the complete picture of what the US Federal Reserve’s decision will be next week is formed, and the comparison between them and the numbers that will occur under Trump’s official leadership of the US economy during the year 2025. As is known, Trump’s hostile trade policy supports the rise in inflation rates, which may affect the path of the US Federal Reserve’s policy in the coming months, as a result of which I expect the bank to stop the path of reducing US interest rates.

German Inflation Hits a 4-Month High

According to an official announcement, the annual inflation rate in Germany rose to 2.2% in November 2024, up from 2% in October, in line with initial estimates, and the announcement represents the highest level in four months. According to the announcement, service inflation remained unchanged at 4%, while energy costs declined at a slower pace (-3.7% versus -5.5% in October). At the same time, food inflation slowed to 1.8%, compared to 2.3% in the previous period. On a monthly basis, German consumer prices fell by 0.2%, in line with initial estimates, following a 0.4% increase in October.

Core inflation, which excludes volatile food and energy prices, reached a six-month high of 3% in November. The harmonized inflation rate for the European Union remained at 2.4% annually, confirming the initial estimates. Harmonized consumer prices fell by 0.7% monthly, in line with preliminary data, reversing a 0.4% increase from the previous month.

European stocks halt rally

According to stock trading company platforms, European stock market indices halted a recent upward wave, and according to trades, the Stoxx 50 index declined by 0.7% and the Stoxx 600 index fell by 0.5%, led by a 1.1% decline in industrial stocks. Weaker-than-expected Chinese import and export data affected mining stocks, which fell by 0.8%, and at the same time, investors are cautiously awaiting the announcement of US inflation figures today.

Trading Tips:

The euro-dollar price will remain on a downward path, whatever the US inflation figures today. Cautiously, eyes are turning with the European Central Bank announcement, and selling the euro-dollar is still in place.

EUR/USD Analysis Today:

My technical view of the EUR/USD pair performance has not changed. The overall trend is still downward, and the movement around and below the psychological support level of 1.0500 still supports the bears’ strong control over the trend. Regarding the performance of technical indicators, the RSI is still heading downward, and at the same time, the MACD is strongly bearish, confirming the bears’ opportunity to move towards deeper support levels, the closest of which is currently 1.0435 and 1.0300, which in turn will move the technical indicators towards strong oversold levels and increase expectations towards the future of the Euro-Dollar’s equilibrium price.

On the other hand, and on the same time frame, the daily chart will not witness an initial break of the downtrend without moving towards the resistance levels of 1.0680 and 1.0800 respectively.

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