Created on November 14, 2024

• Alongside the anticipated Trump policies – a stronger US dollar – US inflation figures came in stronger than expected.
• This brought more heavy losses to the performance of the EUR/USD currency pair, with losses extending to the support level of 1.0533.
• Historically, this is the lowest level for the currency pair in a year which it is stable near it at the time of writing the analysis.

What do US inflation figures mean for the strength of the dollar?

Undoubtedly, the rise in US inflation rates has eased the pace of monetary policy easing by the US Federal Reserve, which is positive for the US dollar against other major currencies. Conversely, the European Central Bank is adopting an easing path. The US dollar has gained in the forex market following the rise in the main US consumer price index by 0.2% on a monthly basis in October, bringing the annual rate to 2.6% from 2.4% in September. Generally, the strength of the US dollar reflects the fading expectations of future US interest rate cuts, especially as investors are prepared for inflation to remain above the Federal Reserve’s target of 2.0% for a long time.

Will the EUR/USD reach parity?

There has been increasing talk about the possibility of the EUR/USD moving to parity at 1.1. According to reliable trading platforms, the EUR/USD pair has entered a downward trend in October, with selling intensifying after the unexpectedly strong performance of Donald Trump and the Republicans in the US presidential election vote. Expectations for further collapse of the euro against the dollar have increased as Trump wants to raise tariffs on US imports, which will affect the economies of exporters such as the eurozone. As is known, the United States is the main market for exporting manufactured goods in the eurozone, while any economic blow to China from tariffs will also affect another critical market.

Meanwhile, the ruling coalition in Germany has collapsed, and Europe’s largest economy is now facing a winter of political uncertainty ahead of the February elections.

EUR/USD Technical analysis and forecast:

The overall downward trend of the EUR/USD is gaining strength with the breaking of a key support level of 1.0600. As mentioned in previous technical analyses of the currency pair that this could give bears more strength. Therefore, dear reader, you should expect more downward pressure on the euro against the dollar daily as the picture becomes clearer for the upcoming Trump policies. At the same time, the eurozone, led by Germany, is going through political and economic turbulence.

EUR/USD Buying Signals Today: