EUR/USD refreshes six-month low on Trump's victory, German political collapse


  • EUR/USD weakens as investors await a slew of Fed speakers for fresh interest rate guidance.
  • The Euro declines as Trump’s policies are expected to weigh on the Eurozone’s exports.
  • This week, investors will focus on the US inflation data for October.

EUR/USD posts a fresh six-month low near 1.0650 in Monday’s North American session. The major currency pair weakens as the election of Republican Donald Trump as US President has strengthened the US Dollar’s (USD) outlook in the long run. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, climbs above 105.30.

Trump vowed to raise import tariffs and lower taxes in his election campaign, which would add to United States (US) inflationary pressures and boost debt levels. According to a November 6-7 Reuters poll, 62% of respondents – including 94% of Democrats and 34% of Republicans – said that Trump's policies likely "will push the US national debt higher."

Trump's tax cut proposals could add $7.5 trillion to the nation's debt over the next decade, according to the nonpartisan Committee for a Responsible Federal Budget.

This week, investors will pay close attention to speeches from a slew of Federal Reserve (Fed) officials to get fresh cues about the likely monetary policy action in December. According to the CME FedWatch tool, there is a 65% chance that the central bank will cut interest rates again by 25 basis points (bps) to 4.25%-4.50% in December. This would be the second quarter-to-a-percent interest rate cut by the Fed in a row, as it also reduced its key borrowing rates last week.

On the economic front, investors will focus on the US Consumer Price Index (CPI) data for October, which will be published on Wednesday. The impact of the inflation data is expected to be nominal on the interest rate outlook as Fed officials are confident about the disinflation trend towards the bank’s target of 2%. However, a significant deviation from the consensus could impact the same.

Daily digest market movers: EUR/USD has been hit hard by Euro's weakness

  • EUR/USD remains on tenterhooks as the Euro’s (EUR) outlook is uncertain due to expectations of a global trade war after Trump’s victory in the US presidential election. In the election campaign, Trump warned that the European bloc would have to pay a big price for not buying enough American exports.
  • The impact of Trump’s victory is noticeable on European economic leaders. Speaking at the European Union (EU) Summit on Friday, former European Central Bank (ECB) President Mario Draghi said, "The sense of urgency today is greater than it was a week ago," Reuters reported.
  • Domestic problems in the Eurozone’s major members have also weakened the Euro’s appeal. The collapse of the German three-party coalition has come at a time when the economy is going through a rough phase. The nation managed to dodge a technical recession after expanding surprisingly by 0.2% quarterly in Q3, according to data released by the Federal Statistics Office of Germany on October 30. However, political uncertainty could lead to postponement of government spending and investments.
  • Meanwhile, investors look for fresh cues about the ECB’s likely interest rate action in the December meeting. ECB policymaker and head of Austrian National Bank Robert Holzmann said there is no reason for the central bank to not cut interest rates next month at current point of time, however, the decision will be based on the economic data, which will be available in December.

Euro PRICE Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.67% 0.43% 0.72% 0.34% 0.19% 0.09% 0.45%
EUR -0.67%   -0.27% 0.15% -0.23% -0.40% -0.49% -0.15%
GBP -0.43% 0.27%   0.34% 0.05% -0.12% -0.21% 0.13%
JPY -0.72% -0.15% -0.34%   -0.38% -0.61% -0.53% -0.27%
CAD -0.34% 0.23% -0.05% 0.38%   -0.10% -0.26% 0.08%
AUD -0.19% 0.40% 0.12% 0.61% 0.10%   -0.12% 0.25%
NZD -0.09% 0.49% 0.21% 0.53% 0.26% 0.12%   0.34%
CHF -0.45% 0.15% -0.13% 0.27% -0.08% -0.25% -0.34%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Technical Analysis: EUR/USD posts fresh six-month low around 1.0650

EUR/USD declines to a fresh more than six-month low around 1.0650. The near-term trend of the major currency pair remains bearish as the 20-day and 50-day Exponential Moving Averages (EMAs) near 1.0840 and 1.0910, respectively, continue to decline.

The 14-day Relative Strength Index (RSI) slides 40.00, adds to expectations of more weakness ahead.

The upward-sloping trendline around 1.0800, plotted from the April 16 low at around 1.0600, will act as a key resistance zone for Euro (EUR) bulls. Looking down, the shared currency pair could decline to the year-to-date (YTD) low of 1.0600.

(This story was corrected on November 11 at 11:33 GMT to say that the US CPI data for October will be published on Wednesday, not Thursday.)

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD challenges 1.0500 on Dollar's bounce

EUR/USD challenges 1.0500 on Dollar's bounce

The US Dollar now picks up further pace and weighs on the risk-associated assets, sending EUR/USD to the boundaries of the key 1.0500 region and at shouting distance from its 2024 lows.

EUR/USD News
GBP/USD remains weak and puts 1.2600 to the test

GBP/USD remains weak and puts 1.2600 to the test

GBP/USD remains on the back foot and now approaches the key support at 1.2600 the figure in response to the resurgence of the bid bias in the Greenback.

GBP/USD News
Gold faces extra upside near term

Gold faces extra upside near term

Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.

Gold News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures