Created on December 10, 2024

• Investor risk aversion has returned due to recent developments in the Middle East, which is positive for the US dollar’s gains.
• Accordingly, the EUR/USD pair has returned to the vicinity of the important support level of 1.0500, quickly giving up the gains of the previous weekend that reached the resistance level of 1.0630 following the announcement of strong US jobs data.

Will the Euro-Dollar Rise in the Coming Days?

According to reliable currency trading company platforms, the selling of the Euro has developed into a sideways trend, and the chart also shows the boundaries of the narrow sideways range that has developed since mid-November. Overall, we believe that the coming days may see the Euro-Dollar retest the upper bound of the range at 1.0628. However, a daily close above this level would be a bullish development for those who want a stronger Euro. In general, the EUR/USD pair still needs to trade decisively above 1.06 (and even above 1.0660) to convincingly stop the current downtrend. However, the current rebound above 1.0550 provides at least an additional barrier for the Euro.

Therefore, the technical picture is one of resilience rather than strength. It seems that the markets are tired of buying the US dollar but are not confident enough to buy the Euro directly. Also, the movement of forex prices in recent days indicates the limits of what is called “Trump trading”. In addition, the fact that US interest rates and US Treasury yields remain near recent lows is a major headwind for the US dollar.

The Euro is Concerned with ECB Decisions

The main event for the Euro against other major currencies this week will be the European Central Bank’s decision, where a further interest rate cut is expected. Consensus expects a 25-basis point cut, although market pricing shows that some expect a stronger 50 basis point move. If the latter is implemented, the Euro will weaken. Therefore, the EUR/USD pair will test the bottom of the recent range towards support at 1.0450.

Although there is a strong argument for the ECB to accelerate the pace of policy easing by delivering a 50-basis point cut, it seems that a majority of the Governing Council members prefer 25-basis points, which would lower the deposit rate to 3.0%. Nevertheless, the policy statement will indicate that with downside risks clearly increasing, monetary policy could turn to a more neutral stance before long. We still believe that the ECB will cut the deposit rate further than investors expect next year. At the same time, the “dovish” message issued by the ECB will also be consistent with a weaker Euro exchange rate.

However, not all roads lead to weakening the Euro, and some analysts believe that the ECB will want to show caution, which could strengthen the currency.

Trading Tips:

We still prefer to sell the Euro Dollar from every upside level as the factors of weakness in the Euro are strong and may take time to remove or the opposite may happen, and things will get worse. Cautiously, attentions are turning cautiously to the European Central Bank announcement and US inflation figures.

EUR/USD Analysis Today:

The EUR/USD pair continues to be in a neutral position within an ascending triangle pattern, as the price formed higher lows and found resistance at the key psychological level of 1.0600. At the same time, the upper part of the triangle keeps the gains under control again, pushing the EUR/USD pair closer to the bottom around the secondary psychological level of 1.0550, which also coincides with the dynamic support at the moving averages. In terms of simple moving averages, the 100-day simple moving average appears to be crossing above the 200-day simple moving average, indicating that the trend is bullish or that support is likely to hold rather than break. Stronger upward momentum could stimulate a move above the triangle’s peak and a rise equal to the formation’s height, which extends about 250 pips.

At the same time, the Stochastic indicator is in the oversold zone, indicating exhaustion among the bears, so a shift upwards means that buyers are ready to take control of performance. Also, the oscillator has a large space to rise before reaching the overbought zone, so the price can continue to follow the same approach. Technically, the Relative Strength Index has more room to decline before reaching the oversold zone, so downward pressure may remain for a little longer. Ultimately, a break below the triangle bottom could lead to a decline equal to the formation’s height as well.

EUR/USD Signals:

You can follow the Euro-Dollar recommendations and other free live trading recommendations exclusively through our website. However, it is necessary to consider not taking risks and activating take-profit and stop-loss orders to ensure the safety of the trading account from any sudden price reversals.

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Created on December 10, 2024

Potential signal:

• if this pair breaks down and closes on a daily chart below the 0.82 level, I am not only short of this pair with a stop loss near the 0.8325 level, but I probably start buying XAU/EUR and selling EUR/USD.
• If this pair falls, I can make a strong argument for dropping to at least 0.78 over the longer term.

• During my daily analysis of cross pairs, the EUR/GBP pair looks particularly interesting.
• This is a market that I think will continue to be very noisy, but I’m watching an area in the form of 0.8250 that I think will continue to be crucial.
• With this being the case, we need to watch whether or not we can break down below there. The reason of course is that if we do, we could hit a massive “air pocket” underneath.

European Union

The European Union has a lot of issues right now, not the least of which can be summed up in one word: France. The French economy looks miserable, and of course there are plenty of political issues in that country as well that leads to instability. This is the biggest problem with a single currency for so many countries, just a handful of them can cause chaos. The fact that France is second only to Germany means that it has and outsized influence on what happens with Europe.

On the other side of the English Channel, we have the United Kingdom which of course isn’t doing as well as United States, but its biggest benefit for traders is that it’s not the European Union. The UK has been doing “okay” for a while, but it certainly has its own issues. However, this is a chart that I’ll be watching very closely because I think this could have massive ramifications across the board.

If the market were to break down below the 0.82 level, then I think the bottom falls out for the euro overall. In that environment, I would expect to see the euro struggle against pretty much anything, and therefore I would be all about Shorty not only this pair, but multiple others. With this, I think a major signal is starting to show itself, now it’s only a matter of whether or not we can see a breakdown. That breakdown could very well happen on Thursday, as the European Central Bank has an interest rate decision, and perhaps more importantly, an accompanying statement.

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• GBP/USD trades near 1.2750 following Monday’s choppy action.
• The near-term technical outlook points to a lack of bullish momentum.
• In the absence of high-impact data releases, risk mood could drive the pair’s action.

GBP/USD rose to 1.2800 on Monday but failed to clear that hurdle for the second consecutive trading day. The pair stays in a consolidation phase at around 1.2750 early Tuesday.

The negative shift seen in risk mood helped the US Dollar (USD) hold its ground in the second half of the day on Monday and caused GBP/USD to erase its daily gains. Wall Street’s main indexes started the week on a bearish note and lost between 0.5% and 0.8% on a daily basis. Early Tuesday, US stock index futures trade mixed.

In the early American session on Tuesday, the US Bureau of Labor Statistics (BLS) will publish a revision to the third-quarter Unit Labor Costs. Markets expect the data to be reaffirmed at 1.9%. In case the BLS revises this figure higher, the immediate market reaction could be USD-positive and weigh on GBP/USD. On the flip side, a negative revision is likely to have the opposite effect on the pair’s action.

Nevertheless, investors could opt to wait for Wednesday’s November Consumer Price Index (CPI) data from the US before taking large positions. Until then, the risk perception could impact the USD’s valuation. If US stocks continue to push lower after the opening bell, the USD could preserve its strength and make it difficult for GBP/USD to attract bulls.

GBP/USD Technical Analysis

In case GBP/USD flips 1.2750 (Fibonacci 50% retracement of the latest downtrend) into resistance, buyers could be discouraged. In this scenario, 1.2700 (Fibonacci 38.2% retracement) could be seen as next support before 1.2660 (100-period SMA).

If GBP/USD stabilizes above 1.2750 and continues to use that level as support, the 200-period Simple Moving Average (SMA) at 1.2770 could act as next resistance before 1.2800 (Fibonacci 61.8% retracement).

Created on December 09, 2024

• At the beginning of another significant trading week, the EUR/USD currency pair is stabilizing on the downside around 1.0566 after failing to break above the 1.0630 resistance level last Friday.
• Obviously, this follows the release of stronger-than-expected US jobs data.
• The EUR/USD pair may remain in a narrow range with a bearish bias until the European Central Bank’s announcement this week, along with the release of US inflation data.

Weakening of the Eurozone Economy Affects the Currency

Political instability in the largest Eurozone economies has not been the sole factor behind the weakening of investor sentiment towards the Euro. Recently, the bloc’s economy has been facing numerous difficulties, including a significant slowdown. Also, the European Central Bank’s plans have not yielded satisfactory results. Forecasts currently indicate that France is expected to grow by 1.1% this year and 0.8% in 2025, while the German economy is expected to shrink by 0.1% this year, marking the second consecutive year of contraction, and then recover modestly by 0.7% in 2025. As for the largest economy in the Eurozone, Germany faces headwinds from a shortage of skilled labor, excessive bureaucracy, and high energy prices, and efforts to address these issues have been hampered by disagreements within the German Chancellor’s coalition. The Eurozone economy is expected to face significant challenges if the incoming Trump administration’s trade wars impact the bloc’s exports.

US Jobs Data Indicates a Strong Economy

The US Dollar performed strongly following the release of details from the previous month’s US jobs report. The US economy added a total of 227,000 jobs, while the US unemployment rate rose to 4.2% from 4.1% previously. Also, hourly wages increased by 0.4%. Overall, the November US jobs report provided the latest evidence that the US labour market remains strong, although it has lost much of the momentum from the hiring boom of 2021-2023 when the US economy was recovering from the pandemic recession.

The gradual slowdown in the labour market is partly due to the high interest rates engineered by the Federal Reserve in its efforts to tame inflation. Furthermore, the Federal Reserve has raised interest rates 11 times in 2022 and 2023. Contrary to expectations, the economy has continued to grow despite significant increases in borrowing costs for consumers and businesses. However, since early this year, the labour market has been slowing.

Events Affecting the Euro-Dollar This Week

According to the economic calendar, the performance of the EUR/USD pair this week may be influenced by the release of US inflation data and the announcement of European Central Bank policies. Regarding the first event, forecasts indicate that the US consumer price index reading will decline from 2.6% to 2.5% in November. Overall, US inflation has remained higher in recent months. It is worth noting that these figures will determine the course of US Federal Reserve policy in the coming months.

Regarding the second event, the European Central Bank’s announcement will be closely monitored, especially as the Eurozone economy faces domestic and international challenges. Expectations are high that the ECB will cut interest rates from 3.40% to 3.15% this week, and the main focus will be on the tone of the bank’s policy statement and the press conference held by ECB President Lagarde.

Trading Tips:

We still prefer to sell the Euro Dollar from every upward level, as the factors of the Euro’s weakness are strong and may take time to remove or the opposite may happen and things will get worse.

EUR/USD Analysis Today:

There is no change in my technical view of the performance of the Euro against the US Dollar EUR/USD, as the general trend is still bearish. as we mentioned before, stability around and below the support level of 1.0500 will continue to support the bears’ control over the trend, and moving below it will warn of a stronger downward movement to come. Technically, expectations of the Euro Dollar moving towards the parity price will increase if prices fall to the support levels of 1.0440 and 1.0365, respectively. In contrast, according to the performance on the daily chart, the first break of the Euro Dollar’s downward trend will be the break of the resistance of 1.0822. In general, we still prefer to sell the Euro Dollar from every upward level. 

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The EUR/USD is our featured currency pair this week, owing to the fact we have the European Central Bank’s key rate decision and important inflation data from the US coming in a week before the Federal Reserve’s own decision on interest rates. Ahead of these macro events, the EUR/USD forecast remains modestly bearish, although the currency pair has found some love today thanks to optimism about more stimulus measures being introduced in China, one of the Eurozone’s major exports destinations.

What is driving the markets today?

China’s government announced they will embrace a “moderately loose” strategy next year, in a sign of greater easing ahead that has been hailed by investors hungry for more stimulus today. The news caused Chinese equities and nearly all Chinese-linked assets rally, from copper to commodity stocks in the FTSE. The euro also found some mild support on the view that a stimulus-driven recovery in China will help support eurozone exports into that region. But most of the gains were evidenced in currencies that have even closer trade ties with China, such as the AUD. All eyes are now on the Central Economic Work Conference due to start on Wednesday, for signals of more fiscal support from China.

How big of a cut should we expect from the ECB?

Well, analysts are expecting a standard 25 basis point rate cut at Thursday’s meeting of the Governing Council of the European Central Bank. There were talks of perhaps 50 basis points, which may still be under consideration. However, the ECB is more likely, in our view, to deliver a 25bp cut to take the deposit rate down to 3.15% from the current 3.40% and use the press conference to open the door to several further rate cuts in 2025. Today’s release of the latest Sentix Investor Confidence reading will certainly make the ECB’s doves more vocal. It is not just data that calls for looser policy: Governments in Paris and Berlin both collapsed over budget talks recently and this uncertainty is likely to weigh on growth further. The EUR/USD forecast could turn more bearish if the ECB turns out to be even more dovish than the market is expecting them to be right now.

EUR/USD forecast: CPI is this week’s key US data

US inflation data will be released this week, with CPI coming on Wednesday and PPI a day later. CPI is expected to rise to 2.7% y/y from 2.6% y/y previously. This will be the last set of key data before the Federal Reserve meets next week. Following Trump’s victory in the presidential election race, investors have sharply reduced their expectations about further US interest rate cuts in 2025. The upcoming December rate decision is unlikely to be impacted by this CPI report, unless we see a super-hot print. But whether the Fed will go ahead with a cut at its initial 2025 meetings will be influenced, among other key data highlights, by this CPI report, although it is employment that the Fed is now more focused on.

But after Friday’s somewhat of a softish NFP report, a 25-bps rate cut is now more likely than not. Indeed, market pricing of a December rate cut has risen to around 87% from 70% last week, although this has not yet had any further influence on the EUR/USD’s direction.

Technical EUR/USD forecast: Key levels to watch

Source: TradingView.com

The EUR/USD has now had a few attempts to break above the 1.06 resistance area (i.e., the 1.0595-1.0610 range). So far, it has failed to post a daily close above this range to tip the balance in the bulls’ favour. But will that change as we head deeper into the week remains to be seen. For now, at least, the bulls will need to remain patient as we don’t have a concrete reversal signal to work with. A daily close above this resistance area could potentially pave the way for a short-squeeze rally towards the 1.0700 area, possibly 1.0775/80.

But while the 1.06 resistance area holds, the risks remain skewed to the downside. As such a break below the 1.0500 area is still a scenario that looks more likely than a sharp rally. The 1.0500 level is the most important support to watch in so far as the short-term outlook is concerned. A daily close below the 1.0450-1.0500 area could see the EUR/USD resume its bearish trend that started back in September. If that happens, then the next downside target would be the liquidity resting below the recent lows of around 1.0333 area. Thereafter, you have the round handles like 1.0300 and 1.0200 as the subsequent targets en route to potentially parity.

All told, the EUR/USD forecast is modestly bearish, and we could see the selling resume unless US CPI is super soft, or the ECB is not as dovish as markets are expecting.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

Created on December 09, 2024

• During the trading session on Friday, my daily analysis of the USD/JPY pair continues to look very messy, just due to the fact that we cannot seem to overcome the 200 Day EMA.
• Having said that, we are not necessarily breaking down either, or I think this is a market that is trying to figure out what to do with itself over the longer term.
• I do believe that the interest rate differential will matter, but with the FOMC Meeting coming, it’s possible that traders are waiting to see what the press conference and statement has to say about future trajectory of interest rate cuts or whether or not the Federal Reserve is going to sit still.

The candlestick for the Friday session is rather unimpressive, and we find ourselves sitting right around the crucial ¥150 level as well. With this being the case, think we have got a situation where traders are trying to figure out where to go next, but if we could get above the 50 Day EMA, then the market could really start to take off to the upside. This will be more likely than not if Jerome Powell sounds rather hawkish after the FOMC meeting, or perhaps even more impressively, if the Federal Reserve decides not to cut rates. Remember, the market has a 25 basis point rate cut priced in at the moment in the Fed Futures Funds markets.

Fibonacci

While I’m not a huge Fibonacci ratio trader, it is worth noting that we had recently bounced from the 50% Fibonacci retracement level, and we are hanging around the 38.2% Fibonacci retracement level. While we haven’t necessarily set still, we really haven’t gone anywhere over the last week or so. The US dollar is stronger than most other currencies, but there are certain amount of traders out there pretending that the Bank of Japan can do something to tighten monetary policy. The endgame for Japan is a major collapse of the currency, just due to the massive amount of debt that the Japanese have been living on. However, that doesn’t mean it has to happen today, so I am waiting for a move above the 50 Day EMA to start buying again.

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Created on December 09, 2024

• The British Pound gained significantly against the US Dollar last week, reaching the resistance level of 1.2810.
• However, GBP/USD quickly faced selling pressure, closing the week around 1.2735.
• Meanwhile, we expect the GBP/USD pair to trade within a narrow range with a bearish bias until the release of US inflation data this week, which could shape the future of the Federal Reserve’s monetary policy.
• Conversely, the absence of significant UK economic data releases this week, except for the UK GDP growth rate at the end of the week, will make the performance of GBP/USD dependent on the dollar’s movements and investor sentiment.

US Inflation Data Crucial for the Currency Pair

According to Bloomberg Economics, US headline inflation is expected to be 0.2% month-on-month and 2.6% year-on-year last month, matching October’s figures. Forward-looking pricing and early submissions to the Bloomberg survey align with these expectations. For the Federal Reserve, steady inflation is likely to signal caution when assessing interest rate cuts at the December meeting. Experts at Bloomberg expect US core consumer prices—a better measure of underlying inflation pressures—to have risen by 0.3% in November, matching the previous month’s pace. Also, the data will be released during the Federal Reserve’s traditional blackout period on public comments ahead of the meeting. These figures, along with the non-farm payroll report released last week, will shape expectations for the Fed’s decision.

Trading Advice:

Despite the recent strong performance of the Pound, it may be susceptible to renewed selling in the coming trading sessions.

Technical Analysis for the GBP/USD pair today:

With the gains of the GBP/USD pair, the direction of the technical indicators, the RSI and the MACD, has shifted upwards, and to confirm the general trend has shifted to an upward trend, bulls should launch the currency pair towards the resistance levels of 1.2860. consequently, the psychological resistance of 1.3000. Otherwise, the technical gains of the pair will be subject to renewed selling operations to take profits, which we expect in the coming days. Especially, if the US inflation figures come out stronger than all expectations. The expected US trade wars have expanded, which increases the demand for buying the US dollar as a safe haven. As is known, the British pound is a risk currency. Decisively, it must be considered that returning to the 1.2600 level will end hopes for the recent rise for a period of time.

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• US employers added 224,000 new workers in November.

• Markets raised the likelihood of a 25-bps December Fed rate cut from 70% to 85%.

• Traders await the US CPI report for more clues on Fed rate cuts.

The EUR/USD outlook shows some strength in the euro as the dollar drops due to increasing bets for a December Fed rate cut. Meanwhile, traders remained cautious ahead of key US inflation data that will continue shaping the outlook for US monetary policy. 

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The greenback fluctuated on Friday when data showed a mixed picture of the US labor sector. Employers added 224,000 new workers in November, beating forecasts. This surge in job growth initially boosted the dollar. However, the unemployment rate rose from 4.1% to 4.2%, signaling cracks in the labor market. As a result, markets raised the likelihood of a 25-bps December Fed rate cut from 70% to 85%, weighing on the dollar. 

Meanwhile, the euro remained vulnerable ahead of the ECB meeting. At the same time, fears of likely US tariffs have kept downward pressure on the currency. 

A Reuters poll showed that most economists expect the European Central Bank to lower borrowing costs by 25-bps in December. At the same time, they expect 100-bps of cuts by the end of next year. 

Meanwhile, traders await the US CPI report for more clues on Fed rate cuts.  

EUR/USD key events today

Neither the US nor the Eurozone will release any key reports today. Therefore, the pair might remain in consolidation ahead of a busy week.

EUR/USD technical outlook: Bulls challenge the 1.0601 resistance

On the technical side, the EUR/USD price is trading in a range between the 1.0400 support level and the 1.0601 resistance level. This sideways move came after a downtrend that weakened at the 1.0400 support level. The range is a shallow corrective move that might end to allow the downtrend to continue. Therefore, bulls might find it difficult to breach the 1.0601 resistance level. Meanwhile, a break below the 1.0400 support level would signal a continuation of the downtrend. 

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On the other hand, if bears are not strong enough to continue pushing EUR/USD lower, it might reverse to start an uptrend. Currently, bulls are pushing the price higher after retesting the 30-SMA support. However, the price must break above the 1.0601 resistance level to make higher highs and lows.

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• GBP/USD trades slightly above 1.2750 in the European morning on Monday.
• 1.2780 aligns as next key resistance level for the pair.
• A positive shift in risk mood could help GBP/USD stretch higher.

After spiking to its highest level since November 12 above 1.2800 on Friday, GBP/USD reversed its direction in the American session and closed in the red, snapping a three-day winning streak. In the European morning on Monday, the pair holds its ground and looks to test 1.2780 resistance.

The data published by the US Bureau of Labor Statistics (BLS) showed on Friday that Nonfarm Payrolls (NFP) in the US rose by 227,000 in November, beating the market expectation for an increase of 200,000. The Unemployment Rate edged higher to 4.2% from 4.1% in the same period, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, remained unchanged at 4%, coming in above analysts’ forecast of 3.9%. After suffering large losses against its major rivals on Thursday, the US Dollar (USD) benefited from the upbeat jobs report late Friday, causing GBP/USD to stretch lower.

The US economic calendar will not offer any high-tier data releases until the BLS publishes the Consumer Price Index (CPI) figures for November on Wednesday.

In the European morning on Monday, the UK’s FTSE 100 is up nearly 0.4% and US stock index futures trade marginally higher on the day. In case risk flows dominate the action in financial markets following a bullish opening in Wall Street, the USD could come under renewed selling pressure and help GBP/USD push higher.

GBP/USD Technical Analysis

GBP/USD holds above the ascending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, highlighting the bullish bias in the near term. On the upside, the 200-period Simple Moving Average (SMA) aligns as first resistance at 1.2780 ahead of 1.2810-1.2820 (Fibonacci 61.8% retracement of the latest downtrend, 200-day SMA) and 1.2870 (50-day SMA).

Looking south, immediate support could be spotted at 1.2750 (Fibonacci 50% retracement) before 1.2700 (Fibonacci 38.2% retracement) could be seen as next support before 1.2650 (100-period SMA).

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