EUR/USD Faces Selling Pressure
The EUR/USD pair experienced a surge in selling pressure, dropping back to the 1.0460 zone as the US Dollar strengthened to three-day highs. This shift was influenced by various factors impacting the global markets, particularly political unrest in France that weighed heavily on investor sentiment.
Monetary Policy Analysis: Fed and ECB
- The Federal Reserve (Fed) implemented an anticipated rate cut, reducing the benchmark rate by 25 basis points to 4.75%-5.00% on November 7.
- Fed Chair Jerome Powell’s cautious stance on further rate cuts has eased expectations for immediate easing measures, providing support to the US Dollar.
- The European Central Bank (ECB) has maintained its rates since the October cut, with inflation concerns and upcoming data influencing future decisions.
- Hawkish comments from ECB officials have bolstered the Euro, emphasizing a careful approach to policy adjustments.
Impact of Trump’s Trade Policies
Trump’s trade policies pose a potential wildcard in the market, with additional tariffs possibly leading to inflation in the US. This could prompt a more hawkish response from the Fed, strengthening the USD and adding pressure on the EUR/USD pair and other risk-related currencies.
Technical Analysis for EUR/USD
- Key support levels for EUR/USD include 1.0331, 1.0290, and 1.0222, with potential further declines.
- Immediate resistance levels are at 1.0609, 1.0849, and 1.0936, with a bearish bias as long as the pair remains below the 200-day moving average.
- Short-term technical indicators suggest a bearish trend, with resistance at 1.0596 and 1.0653, and support at 1.0460, 1.0331, and 1.0290.
Overall, the EUR/USD pair faces downward pressure due to the strengthening US Dollar and uncertainties surrounding global trade policies and political events. Understanding these factors can help investors make informed decisions in the foreign exchange market.