EUR/USD Price Analysis – Jan 08, 2025
Daily Price Outlook
During the early European trading session on Wednesday, the EUR/USD currency pair sustained its upward trend, climbing toward 1.0350. However, the gains may be limited as investors look ahead to the Federal Reserve's stance on interest rates in 2025.
The market is currently adjusting its expectations for a slower pace of rate cuts by the Fed, which could cap the euro's momentum against the US dollar. Traders are closely awaiting the release of the Federal Open Market Committee (FOMC) Minutes later today, which could provide more clarity on the Fed's plans.
On the other side of the Atlantic, the European Central Bank (ECB) is facing its own set of challenges. Despite rising inflation, the market expects the ECB to remain aggressive with rate cuts in 2025.
The anticipation is that the ECB will cut rates by 25 basis points in its upcoming meeting on January 30, and traders are predicting a total of just over 100 basis points of cuts for the year.
This prospect of ECB rate cuts could put some pressure on the Euro (EUR) against the US Dollar (USD), limiting the potential for significant movement in the EUR/USD pair in the short term. The balance between these central bank policies will likely be a key factor influencing the currency pair's future performance.
Euro Faces Pressure from ECB Rate Cut Expectations and Weak German Data
On the EUR front, markets are still expecting aggressive rate cuts from the European Central Bank (ECB) in 2025, even though inflation continues to rise. This could create selling pressure on the Euro (EUR) against the US Dollar (USD).
The ECB is anticipated to cut rates by 25 basis points (bps) in their next meeting on January 30. For the rest of the year, traders expect a total of over 100 bps in rate cuts, which could weaken the Euro further and limit its potential for gains against the USD.
Moving ahead, traders will be looking closely at key economic data from Germany and the Eurozone. German Retail Sales, along with Eurozone Consumer Confidence and the Producer Price Index (PPI), will be in focus.
If these reports come in stronger than expected, it could provide some support for the Euro. Positive results could lift the shared currency and potentially boost the EUR/USD pair.
However, the outlook isn't all positive for the Euro. Recent data from Germany showed a sharp decline in Factory Orders for November, with contracts for goods “Made in Germany” falling by 5.4%, following a 1.5% drop in October.
This unexpected slump suggests that Germany’s manufacturing sector continues to struggle, which is concerning for the Eurozone's economic recovery.
The weaker-than-expected data could add pressure on the Euro, making it harder for the EUR/USD pair to sustain its upward movement.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.3539, up 0.14% for the day, maintaining a steady trajectory around its pivot point of $1.03731.
The 4-hour chart highlights immediate resistance at $1.04424, with subsequent levels at $1.05287 and $1.06035, reflecting potential targets if the pair gains momentum.
Immediate support lies at $1.02884, with additional key levels at $1.02240 and $1.01664, which serve as critical zones for bearish activity.
The RSI at 48 indicates neutral momentum, reflecting a balanced market sentiment. The 50 EMA, currently at $1.03718, aligns closely with the pivot point, signaling its importance as a dynamic support-resistance zone.
A break below $1.03725 could trigger selling pressure, targeting support at $1.02850. On the other hand, a sustained move above $1.04424 may pave the way for bullish moves toward higher resistance levels.
Traders are advised to consider short positions below $1.03725, with a take-profit target at $1.02850 and a stop-loss at $1.04208.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Resistance Levels: Immediate resistance at $1.03929, with next targets at $1.04582 and $1.05136.
- Support Zones: Immediate support at $1.02579, with additional levels at $1.02109 and $1.01664.
- Momentum Indicators: RSI at 41 signals weak momentum; price below 50-day EMA at $1.03769 reinforces short-term bearish outlook.
EUR/USD is trading at $1.03107, marking a slight increase of 0.03% during the day as the pair consolidates near critical levels. The 4-hour chart indicates a cautious market sentiment, with the price testing immediate support at $1.02579.
This support is crucial to preventing further downside, as a break below this level could expose the pair to deeper retracements toward $1.02109 and $1.01664.
On the upside, the pair faces immediate resistance at $1.03929, followed by $1.04582 and $1.05136. A breakout above $1.03929 could spark bullish momentum, potentially targeting the higher resistance levels.
However, with the price currently below the 50-day EMA at $1.03769, bearish sentiment remains dominant in the near term.
The Relative Strength Index (RSI) stands at 41, reflecting subdued momentum and hinting at potential oversold conditions.
Traders may focus on the pivot point at $1.03453, which acts as a key level for determining the next directional bias.A sustained move below this pivot could solidify the bearish trend, making short positions favorable.
For intraday trading, selling below $1.03461 with a target of $1.02586 appears prudent, while a stop-loss at $1.03944 safeguards against unexpected reversals.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.03461
Take Profit – 1.02586
Stop Loss – 1.03944
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$875/ -$483
Profit & Loss Per Mini Lot = +$87/ -$48
EUR/USD Price Analysis – Jan 06, 2025
Daily Price Outlook
During the European trading session on Monday, the EUR/USD currency pair edged higher, staying bullish around 1.0347, despite facing some negative factors. The pair gains could be limited as many analysts predict that it could drop further.
This expectation is mainly due to the different paths the Federal Reserve (Fed) and the European Central Bank (ECB) are taking with their monetary policies. The Fed is likely to stay on its tightening course, while the ECB might face challenges in keeping up.
Moreover, the Eurozone Sentix Investor Confidence Index showed a decline, which adds to the negative sentiment surrounding the Euro.
The economic outlook for Germany, a key player in the Eurozone, is also getting worse, which could further drag down the Euro. This situation could lead to more bearish pressure on EUR/USD in the coming days.
Traders will be watching closely for economic data later today, including the HCOB Composite Purchasing Managers' Index (PMI) for the Eurozone and the preliminary Consumer Price Index (CPI) data for Germany.
These reports could provide more clues about the future direction of the Euro and whether the expected bearish trend for EUR/USD will continue.
ECB's Easing Stance and Eurozone Economic Weakness Weigh on EUR/USD
On the EUR front, the European Central Bank (ECB) policymakers are leaning towards continuing their current approach of easing monetary policy.
The markets have already priced in a 113 basis point (bps) cut in ECB interest rates this year, which means at least four rate cuts of 25 bps each.
This outlook is due to rising concerns that inflation in the Eurozone is still far from the ECB's target of 2%.
In an interview on Thursday, ECB Governing Council member Yannis Stournaras from the Bank of Greece suggested that the ECB’s base interest rates should be reduced to around 2% by autumn.
This indicates that the ECB could lower its Deposit Facility rate at each of the next four meetings, reflecting a cautious approach to tackle inflation and economic challenges.
On the data front, the latest data from the Eurozone Sentix Investor Confidence Index showed a slight decline in January, dropping to -17.7 from -17.5 in December.
Additionally, the Current Situation gauge, which reflects the overall economic mood, hit its lowest point since October 2022, falling to -29.5 from -28.5 in December.
Sentix warned that the economic situation in the Eurozone is worsening, with Germany’s recession weighing heavily on the region’s economic growth.
Therefore, the ECB's expected rate cuts and the weakening economic outlook in the Eurozone, particularly in Germany, could put downward pressure on the Euro. This may lead to a bearish sentiment for EUR/USD, potentially causing the pair to decline further.
US Dollar Strengthened by Fed's Cautious Approach to Rate Cuts
On the US front, the broad-based US dollar has been supported by the Federal Reserve’s more cautious stance on rate cuts. After three consecutive rate reductions, the Fed is expected to pause its easing cycle during the January meeting.
The latest projections from the Fed’s Summary of Economic Projections show that policymakers anticipate the Federal Funds Rate will reach 3.9% by the end of the year, with just two rate cuts expected in 2025.
Fed officials are signaling a more careful approach to further rate reductions. Richmond Fed President Thomas Barkin noted that the policy rate should remain high until there is more confidence that inflation will return to the Fed’s 2% target. This indicates that the Fed is in no rush to lower rates quickly, as inflation remains a concern.
Moreover, other Fed officials, including Governor Adriana Kugler and San Francisco Fed President Mary Daly, have emphasized the difficult balancing act the US central bank faces.
They are trying to reduce rates without triggering runaway inflation, which could weigh on the economy. This cautious approach adds to the overall strength of the US dollar as markets expect slower and more gradual rate cuts in the near future.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03107, marking a slight increase of 0.03% during the day as the pair consolidates near critical levels. The 4-hour chart indicates a cautious market sentiment, with the price testing immediate support at $1.02579.
This support is crucial to preventing further downside, as a break below this level could expose the pair to deeper retracements toward $1.02109 and $1.01664.
On the upside, the pair faces immediate resistance at $1.03929, followed by $1.04582 and $1.05136. A breakout above $1.03929 could spark bullish momentum, potentially targeting the higher resistance levels.
However, with the price currently below the 50-day EMA at $1.03769, bearish sentiment remains dominant in the near term.
The Relative Strength Index (RSI) stands at 41, reflecting subdued momentum and hinting at potential oversold conditions.
Traders may focus on the pivot point at $1.03453, which acts as a key level for determining the next directional bias.A sustained move below this pivot could solidify the bearish trend, making short positions favorable.
For intraday trading, selling below $1.03461 with a target of $1.02586 appears prudent, while a stop-loss at $1.03944 safeguards against unexpected reversals.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Oversold Conditions: RSI at 30 suggests potential for a rebound but requires confirmation of momentum.
- Resistance Levels: Immediate resistance at 1.03399; further hurdles at 1.03708 and 1.04122.
- Support Zones: Key support at 1.01664, with additional levels at 1.01308, signaling bearish risks.
EUR/USD is trading at 1.0281, down 0.21% as bearish sentiment prevails, with the pair slipping below its pivot point at 1.02977.Immediate resistance is positioned at 1.03399, followed by higher levels at 1.03708 and 1.04122.
On the downside, support is found at 1.01664 and extends to 1.01308, underscoring critical zones for potential rebounds.
The RSI is at 30, signaling oversold conditions, which could attract short-term buyers, though caution is advised as bearish momentum remains dominant.
The pair is trading well below its 50-day EMA at 1.03862, reinforcing the bearish trend and suggesting a challenge to sustain any recovery above key resistance levels.
For a bullish reversal, EUR/USD needs to reclaim the pivot point at 1.02977, which could target the first resistance at 1.03399.
However, failure to hold support at 1.01664 may trigger further declines, exposing the pair to lower levels at 1.01308 or below.
Market participants should monitor price action near the pivot and RSI for signs of a rebound or continued downward pressure.
The current technical setup favors a cautious approach as EUR/USD hovers near critical thresholds.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.02353
Take Profit – 1.02968
Stop Loss – 1.01998
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$615/ -$355
Profit & Loss Per Mini Lot = +$61 / -$35
EUR/USD Price Analysis – Jan 03, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair started the 2025 trading year with a sharp decline, dropping by 0.8% and reaching the 1.0250 level, marking its lowest point since November 2022, a nearly 26-month low.
The drop was driven by disappointing European Manufacturing Purchasing Managers Index (PMI) data, which came in below expectations.
This added to the pressure on the euro, as traders were already feeling uneasy after dovish comments from European Central Bank (ECB) policymaker Yannis Stournaras later in the day.
On the flip side, the US dollar continued its upward momentum, climbing to a fresh multi-year high of 109.56 following the release of the latest US Jobless Claims data.
The combination of weaker economic data from Europe and a stronger dollar kept the EUR/USD pair firmly on the back foot, with traders closely monitoring upcoming developments for any signs of a reversal.
EUR/USD Under Pressure Amid Weaker European Data, Dovish ECB Outlook, and Rising Petrol Prices
On the EUR front, the European Manufacturing Purchasing Managers Index (PMI) data missed expectations on Thursday, further adding to the pressure on the euro.
This was followed by a dovish comment from European Central Bank (ECB) policymaker Yannis Stournaras, who stated that the ECB plans to gradually lower interest rates through 2025. He suggested that rates could be around 2% later this year, which signals a more cautious approach from the ECB.
With the Federal Reserve expected to reduce interest rates more slowly than initially anticipated in 2025, the interest rate gap between the Euro and the US dollar is likely to grow, putting additional downward pressure on EUR/USD throughout the year.
This has led some analysts to predict that the euro could reach parity with the dollar in the near future.
In addition, the Pan-European PMI data showed a slight decline in December, coming in at 45.1, just below the expected 45.2.
While the data wasn’t a huge market mover, it highlighted the growing chance that the ECB may speed up its rate cuts to help the struggling European economy.
At the same time, rising petrol prices, reaching two-year highs, are adding to the challenges in Europe. Together, these factors are making it difficult for the euro to gain strength, keeping the pressure on EUR/USD in the long term.
Therefore, the combination of weaker European economic data, dovish ECB signals, and rising petrol prices is likely to keep the EUR/USD pair under pressure.
As interest rate differentials widen, the euro could continue to struggle, possibly pushing EUR/USD towards parity with the dollar.
EUR/USD – Technical Analysis
EUR/USD is trading at 1.0281, down 0.21% as bearish sentiment prevails, with the pair slipping below its pivot point at 1.02977.Immediate resistance is positioned at 1.03399, followed by higher levels at 1.03708 and 1.04122.
On the downside, support is found at 1.01664 and extends to 1.01308, underscoring critical zones for potential rebounds.
The RSI is at 30, signaling oversold conditions, which could attract short-term buyers, though caution is advised as bearish momentum remains dominant.
The pair is trading well below its 50-day EMA at 1.03862, reinforcing the bearish trend and suggesting a challenge to sustain any recovery above key resistance levels.
For a bullish reversal, EUR/USD needs to reclaim the pivot point at 1.02977, which could target the first resistance at 1.03399.
However, failure to hold support at 1.01664 may trigger further declines, exposing the pair to lower levels at 1.01308 or below.
Market participants should monitor price action near the pivot and RSI for signs of a rebound or continued downward pressure.
The current technical setup favors a cautious approach as EUR/USD hovers near critical thresholds.
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EUR/USD Price Analysis – Jan 01, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair saw some bullish movement, trading around the 1.0358 level and even reaching an intra-day high of 1.0358. This rebound was largely driven by a weaker US Dollar, which has been under pressure due to declining Treasury yields.
Despite this short-term gain, the Euro faces ongoing challenges as the European Central Bank (ECB) has kept its stance on interest rates dovish for the coming year, which weighs on the Euro. Meanwhile, safe-haven outflows have added pressure to the Euro, especially as global uncertainty grows.
Moreover, the ongoing Russia-Ukraine conflict and tensions in the Middle East have spiked geopolitical risks, making investors more cautious and putting further strain on the Euro. These factors combined are likely to limit the EUR/USD pair's momentum in the near term.
Euro Faces Pressure from Geopolitical Risks and Safe-Haven Flows
On the EUR front, the European Central Bank (ECB) is taking a cautious approach with its interest rate policy for next year, which is weighing on the Euro and the EUR/USD pair. This year, the ECB lowered its Deposit Facility rate by 100 basis points (bps) to 3%.
Looking ahead, it’s expected that the ECB will reduce the rate further to 2% by June 2025, which policymakers consider a neutral rate.
This indicates that the ECB may cut its borrowing rates by 25 bps at each meeting in the first half of 2025, signaling a more dovish stance. As a result, the Euro faces downward pressure, limiting its potential to rise against the US Dollar.
On the other hand, the Euro is facing more challenges due to increased geopolitical risks. The ongoing Russia-Ukraine conflict and tensions in the Middle East are creating uncertainty in the global markets.
Recently, Israel's ambassador to the United Nations warned Yemen's Iran-backed Houthi militants to stop their missile attacks on Israel.
These geopolitical risks are pushing investors to move away from riskier assets, leading to outflows from the Euro. As a safe-haven currency, the US Dollar benefits in such times, further putting pressure on the Euro and the EUR/USD pair.
In addition to the ECB's actions, the Euro is facing more challenges due to rising geopolitical risks. The ongoing Russia-Ukraine conflict and increasing tensions in the Middle East are causing uncertainty in the global markets.
Recently, Israel’s ambassador to the United Nations, Danny Danon, warned Yemen's Houthi militants, backed by Iran, to stop their missile attacks on Israel.
Such geopolitical events tend to drive investors away from riskier assets, including the Euro, and into safe-haven assets like the US Dollar. This added risk further pressures the Euro, limiting its strength against other currencies.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03549, down 0.49% as bearish sentiment dominates the short-term market outlook. On the 4-hour chart, the pivot point at $1.03441 is critical, acting as a key threshold for near-term momentum.
Immediate resistance is observed at $1.03826, with higher levels at $1.04236 and $1.04581. Conversely, support is positioned at $1.03100, with further protection at $1.02750 and $1.02355, offering potential stabilization in case of extended selling pressure.
Technical indicators highlight bearish conditions, with the RSI at 33, signaling an oversold market ripe for a potential corrective bounce. However, the pair is trading below the 50 EMA at $1.04066, reinforcing a bearish bias in the short term.
A break below the pivot point of $1.03441 could accelerate selling, targeting the $1.03100 support level. On the upside, reclaiming $1.03826 resistance may encourage buyers, potentially driving the price toward $1.04236.
Market participants should closely monitor the $1.03441 pivot point, as sustained trading above it could signal a reversal of the bearish trend.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Resistance Levels: Immediate resistance at $1.03826; next targets at $1.04236 and $1.04581.
- Support Zones: Key support at $1.03100, with deeper levels at $1.02750 and $1.02355 offering safety.
- Momentum Indicators: RSI at 33 suggests oversold conditions; price remains below the 50 EMA at $1.04066, maintaining a bearish short-term outlook.
The EUR/USD pair is trading at $1.03549, down 0.49% as bearish sentiment dominates the short-term market outlook. On the 4-hour chart, the pivot point at $1.03441 is critical, acting as a key threshold for near-term momentum.
Immediate resistance is observed at $1.03826, with higher levels at $1.04236 and $1.04581. Conversely, support is positioned at $1.03100, with further protection at $1.02750 and $1.02355, offering potential stabilization in case of extended selling pressure.
Technical indicators highlight bearish conditions, with the RSI at 33, signaling an oversold market ripe for a potential corrective bounce. However, the pair is trading below the 50 EMA at $1.04066, reinforcing a bearish bias in the short term.
A break below the pivot point of $1.03441 could accelerate selling, targeting the $1.03100 support level. On the upside, reclaiming $1.03826 resistance may encourage buyers, potentially driving the price toward $1.04236.
Market participants should closely monitor the $1.03441 pivot point, as sustained trading above it could signal a reversal of the bearish trend.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.03440
Take Profit – 1.04055
Stop Loss – 1.03085
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$615/ -$355
Profit & Loss Per Mini Lot = +$61/ -$35
EUR/USD Price Analysis – Dec 30, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to hold onto its modest gains and edged lower around the 1.0415 level, hitting an intraday low of 1.0409.
This downward move can largely be attributed to a combination of factors, including the thin trading volume due to year-end liquidity, which is common during the holiday season.
Moreover, the Euro has also faced bearish pressure in the final months of 2024, with a near 5.5% decline against the US Dollar (USD) as the European Central Bank (ECB) stuck to its dovish stance on interest rates, disappointing investors who had hoped for a more aggressive approach to combat inflation.
Meanwhile, the concerns over the Eurozone’s economic health have been mounting, particularly with the threat of tariff hikes under US President-elect Donald Trump. These tariffs are expected to negatively impact the Eurozone’s export-driven economy.
US Dollar Strength and Its Impact on EUR/USD Amid Economic Data and Fed Expectations
On the US front, the broad-based US dollar has been gaining strength, consolidating near a four-day support level as trading volume remains thin during the year-end period.
The Greenback is on track to close the year near its highest level, with higher Treasury yields providing a strong boost.
US bond yields have been rising recently as investors expect the policies under President-elect Trump, like higher tariffs and tax cuts, to drive economic growth and inflation.
The Fed has already signaled fewer interest rate cuts for 2025 in its latest projections, with Federal Fund rates expected to be around 3.9% by the end of the year.
After a hawkish rate cut in December, Goldman Sachs predicts the Fed will cut rates again in March, with two more cuts expected in June and September.
This week, investors are focused on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for December, due on Friday. The PMI is expected to drop slightly to 48.3 from 48.4, indicating that manufacturing output is slowing down at a slightly faster pace.
Therefore, the strengthening US dollar, driven by higher Treasury yields and Fed policy expectations, puts downward pressure on the EUR/USD pair.
ECB’s Dovish Policy and US Tariff Concerns Weigh on the Euro
On the EUR front, the EUR/USD currency pair is set to close the year with a nearly 5.5% decline against the US Dollar, largely due to the European Central Bank’s (ECB) dovish stance on interest rates.
The Euro has been especially weak in the last three months of 2024, as market participants are concerned about the Eurozone’s economic growth.
This worry is compounded by the incoming tariff hikes from US President-elect Donald Trump, which are expected to negatively impact the Eurozone’s export sector.
The ECB has already lowered its Deposit Facility rate by 100 basis points to 3% this year, and it’s expected to cut it further to 2% by the middle of 2025.
This would indicate that the ECB plans to lower its key borrowing rates by 25 basis points at each meeting during the first half of next year.
Many ECB officials are concerned about inflation falling below their target of 2%, particularly with the political uncertainty in Germany and potential trade tensions with the US.
Therefore, the ECB's dovish stance and anticipated rate cuts, combined with concerns over Eurozone growth and US trade tensions, are likely to weaken the Euro further.
As a result, EUR/USD is expected to remain under pressure, potentially leading to continued declines.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04223, up 0.03% in the latest session, reflecting mild bullish sentiment as the pair hovers just below its pivot point at $1.04430. This level serves as a critical juncture for directional movement.
A sustained move below the pivot suggests bearish momentum, with immediate support at $1.03843 and further downside targets at $1.03430 and $1.03003.
Resistance levels are clustered at $1.04753, $1.05029, and $1.05453, forming a significant barrier for any upward movement.
The Relative Strength Index (RSI) at 54 indicates neutral to slightly bullish momentum, with no signs of overbought conditions. Meanwhile, the pair is trading slightly above the 50 EMA, which sits at $1.04117, signaling modest support for short-term gains.
The 4-hour chart reveals consolidation near the pivot point, suggesting indecision among traders. A sell strategy below $1.04427 with a target of $1.03836 and a stop loss at $1.04752 aligns with current technical trends.
However, a decisive breakout above $1.04430 could pave the way for testing the resistance at $1.04753. Market participants should remain vigilant as the pair navigates this critical zone, with key U.S. data releases likely to shape sentiment.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot Point: $1.04430 is the critical level; bearish below this, bullish above.
- Support Levels: Immediate support at $1.03843, followed by $1.03430 and $1.03003.
- Resistance Levels: Key resistance at $1.04753, $1.05029, and $1.05453 limits upward momentum.
EUR/USD is trading at $1.04223, up 0.03% in the latest session, reflecting mild bullish sentiment as the pair hovers just below its pivot point at $1.04430. This level serves as a critical juncture for directional movement.
A sustained move below the pivot suggests bearish momentum, with immediate support at $1.03843 and further downside targets at $1.03430 and $1.03003.
Resistance levels are clustered at $1.04753, $1.05029, and $1.05453, forming a significant barrier for any upward movement.
The Relative Strength Index (RSI) at 54 indicates neutral to slightly bullish momentum, with no signs of overbought conditions. Meanwhile, the pair is trading slightly above the 50 EMA, which sits at $1.04117, signaling modest support for short-term gains.
The 4-hour chart reveals consolidation near the pivot point, suggesting indecision among traders. A sell strategy below $1.04427 with a target of $1.03836 and a stop loss at $1.04752 aligns with current technical trends.
However, a decisive breakout above $1.04430 could pave the way for testing the resistance at $1.04753. Market participants should remain vigilant as the pair navigates this critical zone, with key U.S. data releases likely to shape sentiment.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.04427
Take Profit – 1.03836
Stop Loss – 1.04752
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$591/ -$325
Profit & Loss Per Mini Lot = +$59/ -$32
EUR/USD Price Analysis – Dec 27, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained some slight bullish traction, holding around the 1.0432 level.
However, the outlook for the Euro (EUR) remains weak, with market expectations that the European Central Bank (ECB) will continue its gradual interest rate cuts well into the first half of 2025.
As a result, the pair has been struggling to find clear direction, moving within a narrow range near 1.0400. Thin trading volumes, due to the Christmas holiday, have also contributed to the lack of significant movement in the pair.
On the other hand, the US Dollar (USD) has seen a small uptick, fueled by expectations that the Federal Reserve (Fed) will continue its gradual approach to policy easing, especially after inflation showed some signs of rebounding over the past few months.
With both central banks likely to follow divergent paths, EUR/USD remains stuck in this indecisive pattern as traders await clearer signals for the next move.
Euro Outlook Weighed Down by ECB Rate Cuts, Limiting EUR/USD Upside Potential
On the EUR front, the shared currency is struggling as the overall outlook for the Euro (EUR) remains negative. The European Central Bank (ECB) is expected to continue cutting interest rates at the current pace until mid-2025.
The ECB has already lowered its Deposit Facility rate by 100 basis points (bps) this year and is anticipated to reduce it by another 100 bps in the coming year. This is due to inflation in the Eurozone being more under control, although it is still above the ECB's target of 2%.
ECB President Christine Lagarde expressed confidence that inflation is moving in the right direction, saying that they are "very close" to achieving their 2% medium-term target.
However, she emphasized the need to remain cautious about inflation in the services sector. Recent comments from ECB officials suggest that they are aligned with market expectations of further rate cuts, aiming to bring the benchmark deposit rate down to 2%, which they consider a neutral level.
This cautious approach is meant to prevent inflation from falling too far below the target, which could pose risks to the economy.
Therefore, the ECB's continued interest rate cuts and cautious stance on inflation are likely to keep the Euro (EUR) under pressure, leading to limited upside potential for the EUR/USD pair. As a result, the pair may struggle to break higher levels.
US Dollar Strengthens Amid Gradual Fed Easing Expectations and Positive Job Data
On the US front, the broad-based US Dollar has been showing strength, trading higher as the market anticipates a gradual policy easing by the Federal Reserve (Fed).
Despite the slight rebound in inflation over the past three months, expectations for a slowdown in the Fed's interest rate cuts have kept the USD steady.
Recently, the Fed’s updated dot plot suggested two rate cuts in 2025, a revision from the four cuts previously expected. This has helped keep the USD in positive territory, as markets expect the economy to show solid growth under President-elect Donald Trump’s administration.
On the economic front, the latest data has been slightly better than expected. For the week ending December 20, initial jobless claims dropped unexpectedly to 219K, lower than the 220K recorded previously and better than the expected 224K.
Despite the positive job market data, analysts at BCA Research predict that the Fed will eventually cut rates by more than 50 basis points (bps) next year due to expectations that inflation will remain below the Fed’s 2% target and the unemployment rate will rise higher than forecasted. These factors suggest a more cautious outlook for the economy moving forward.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04100, down 0.10% in the last session, as the pair remains under pressure near its pivot point at $1.04430.
Immediate resistance is located at $1.05029, with further resistance levels at $1.05453 and $1.05972. To confirm a bullish recovery, the pair must break and sustain above these levels.
However, the current bias suggests more downside risks. Immediate support lies at $1.03430, with subsequent levels at $1.03033 and $1.02722.
A break below $1.04424 could signal additional selling pressure, targeting $1.03626 in the short term. If bearish momentum persists, the pair may test deeper support levels at $1.03033 or even $1.02722.
Conversely, a recovery above $1.05029 would neutralize the bearish bias, paving the way for a potential upside toward $1.05453.
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