The EUR/USD pair was seen trading cautiously near a two-week low of around 1.1570 in the early European session on Friday. The major currency pair has had difficulty moving upward, primarily due to the strength of the US Dollar (USD), which is buoyed by several factors including a reduction in dovish speculation surrounding the Federal Reserve and improved trade relations between the United States and China.
Currently, the US Dollar Index (DXY), which measures the currency’s value against a basket of six major currencies, has been holding steady near a nearly three-month high of approximately 99.70 reached on Thursday. As reported, the USD has demonstrated a robust performance against various currencies this week, with notable strengths against the British Pound.
A detailed analysis of the USD against other major currencies reveals significant percentage changes, highlighting the USD’s resilience. The pair’s performance against the Euro, GBP, JPY, CAD, AUD, NZD, and CHF indicates a strong week for the Greenback, with the highest gains against the GBP.
Market sentiment shifted following comments from Federal Reserve Chairman Jerome Powell, who, after announcing a 25 basis point interest rate cut to a range of 3.75%-4.00%, indicated that any further easing in December is “far from a foregone conclusion.” This statement has tempered expectations for future monetary policy shifts.
In contrast, the Euro remains stable after the European Central Bank’s (ECB) recent decision to keep its Deposit Facility rate unchanged at 2%. The ECB’s stance reflects a cautious approach in the face of inflation remaining confined around the target, with no major guidance on interest rates expected in the near term.
Attention now turns to the upcoming release of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for October, scheduled for publication at 10:00 GMT.
Currently, the EUR/USD pair is trading within Thursday’s range near 1.1570, exhibiting a bearish trend as it remains below the 20-day Exponential Moving Average, which is situated around 1.1630. The 14-day Relative Strength Index (RSI) is hovering around the 40.00 mark, suggesting that a new bearish momentum could develop if it falls below this level.
In terms of technical analysis, should the EUR/USD pair break below its October 30 low of 1.1547, it could face additional downward pressure, potentially exposing it to the August 5 low of 1.1528, followed by the August 1 low of 1.1392. Conversely, any upward movement would require a breakout above 1.1728, paving the way towards July’s high of 1.1830 and the pivotal resistance level of 1.1900.
With the market closely monitoring these developments, traders remain cautious as they navigate the complexities of global economic conditions and geopolitical developments.
