EUR/USD Current price: 1.0845
- The European Central Bank trimmed interest rates by 25 bps as expected.
- Upbeat United States data pushed the US Dollar into fresh weekly highs.
- EUR/USD is oversold in the near term, but there are no signs of downward exhaustion.
The EUR/USD pair remained under pressure throughout the first part of Thursday, bottoming at 1.0848 ahead of the European Central Bank (ECB) monetary policy decision and United States (US) macroeconomic data. Additionally, market players started looking at the US Presidential run, as polls show a very tight result three weeks ahead of the election.
The ECB decided to lower the benchmark interest rate, the so-called Rate on Deposit Facility, by 25 basis points (bps) from 3.5% to 3.25%. In fact, the three key ECB interest rates were lowered by 25 bps. The accompanying statement noted that “the disinflationary process is well on track,” albeit adding that “domestic inflation remains high, as wages are still rising at an elevated pace.”
The announcement had a limited impact on EUR/USD, with the pair seesawing within a 15 pips’ range. Anyway, the pair dipped to fresh multi-week lows following the release of upbeat US data. The country published September Retail Sales, which rose by 0.4% in the month, while the Philadelphia Fed Manufacturing Survey jumped to 10.3 in October from 1.7 in September. Finally, Initial Jobless Claims for the week ended October 11 rose by 241K, below the 260K anticipated.
As ECB President Christine Lagarde starts the press conference, the EUR/USD pair keeps approaching the 1.0800 mark.
EUR/USD short-term technical outlook
From a technical perspective, the EUR/USD pair is poised to extend its slump. The daily chart shows it continues to post lower lows and lower highs and that it is currently developing below all its moving averages. The 20 Simple Moving Average (SMA) keeps gaining downward traction, although well above directionless 100 and 200 SMAs. Technical indicators, in the meantime, maintain their firmly bearish slopes, reaching oversold readings yet without signs of downward exhaustion.
In the near term, and according to the 4-hour chart, the risk also skews to the downside. A bearish 20 SMA keeps providing intraday resistance, currently at around 1.0885, while the longer ones accelerate south above the shorter one. At the same time, the Momentum indicator hovers directionless within negative levels, while the Relative Strength Index (RSI) indicator heads south at around 26, still favoring another leg south despite oversold conditions.
Support levels: 1.0805 1.0770 1.0735
Resistance levels: 1.0885 1.0920 1.0960
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
USD/JPY remains below 158.00 after Japanese data
Soft US Dollar demand helps the Japanese Yen to trim part of its recent losses, with USD/JPY changing hands around 157.70. Higher than anticipated Tokyo inflation passed unnoticed.
AUD/USD weakens to near 0.6200 amid thin trading
The AUD/USD pair remains on the defensive around 0.6215 during the early Asian session on Friday. The incoming Donald Trump administration is expected to boost growth and lift inflation, supporting the US Dollar (USD). The markets are likely to be quiet ahead of next week’s New Year holiday.
Gold depreciates amid light trading, downside seems limited due to safe-haven demand
Gold edges lower amid thin trading following the Christmas holiday, trading near $2,630 during the Asian session on Friday. However, the safe-haven asset could find upward support as markets anticipate signals regarding the United States economy under the incoming Trump administration and the Fed’s interest rate outlook for 2025.
Floki DAO floats liquidity provisioning for a Floki ETP in Europe
Floki DAO — the organization that manages the memecoin Floki — has proposed allocating a portion of its treasury to an asset manager in a bid to launch an exchange-traded product (ETP) in Europe, allowing institutional investors to gain exposure to the memecoin.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.