The Euro has faced consistent pressure, trading below the 1.1800 mark against a strengthening US Dollar. This shift comes on the back of robust US jobless claims and positive manufacturing activity data, which have contributed to the recent recovery of the Dollar. As of Friday, the EUR/USD pair has declined for three consecutive days, reaching 1.1765, down from the recent four-year highs above 1.1900.
In the US, weekly Initial Jobless Claims dropped by 33,000 to a total of 231,000, surpassing expectations for a softer decline to 240,000. Additionally, the Philly Fed Manufacturing Survey indicated a stronger-than-anticipated recovery, with the index rising to 23.2, marking its highest level since January.
These US economic indicators have not only reinforced the Dollar’s position but have also tempered fears of an acute economic downturn, despite market expectations that the Federal Reserve may need to implement further interest rate cuts in the upcoming months. Futures markets now suggest a 90% chance that rates could be lowered by another 25 basis points this month and nearly 80% probability for a similar reduction in December.
In contrast, Europe is grappling with political unrest, particularly in France, where large-scale anti-austerity protests are taking place. Demonstrators are urging President Emmanuel Macron and newly appointed Prime Minister Sébastien Lecornu to abandon previous spending cuts proposed by former Prime Minister François Bayrou. This turbulence adds further weight to the Euro, particularly given the absence of significant economic data to counteract it.
The European Central Bank’s (ECB) Vice President, Luis de Guindos, recently remarked that the current monetary policy stance remains suitable, but he also warned of high economic uncertainty, signaling that the easing cycle may not be over. This dovish outlook has exerted additional pressure on the Euro as traders assess the potential for further economic instability.
Looking at technical indicators, the EUR/USD exchange rate is experiencing bearish momentum, with the Relative Strength Index falling below the 50 level on the 4-hour chart. The key support level for the Euro is identified at the 1.1700 region, which is reinforced by previous lows recorded earlier in the month. If the Euro fails to hold at this level, the next target for possible support is near the 1.1660 mark.
On a comparative note, the Euro’s performance against other major currencies indicates it fared best against the New Zealand Dollar, while registering minor declines against the US Dollar, British Pound, and others. Overall, the current currency dynamics reflect a cautious market mood characterized by mixed economic indicators and heightened geopolitical tensions.
