EUR/USD Forecast: Potential Bearish Trend Ahead
Key Points to Consider:
- US Consumer Price Index in line with expectations in November.
- European Central Bank expected to announce rate cuts.
- EUR/USD technically bearish, potential downtrend towards 1.0440.
The EUR/USD pair has shown a downward trend, trading below the 1.0500 mark as investors await crucial data releases and central bank decisions. The US Dollar has gained strength amidst a cautious market sentiment and concerns surrounding upcoming monetary policy announcements.
US Consumer Price Index (CPI) Report:
In November, the US Consumer Price Index met market expectations, with a 2.7% increase on a yearly basis. The core reading stood at 3.3%, indicating a steady inflation rate. Despite this, the data was not strong enough to influence the Federal Reserve’s upcoming decision to potentially cut interest rates by 25 basis points.
European Central Bank (ECB) Rate Decision:
The ECB is anticipated to announce a 25 basis point interest rate cut on Thursday. All eyes will be on ECB President Christine Lagarde’s statements regarding economic conditions and future monetary policy actions.
EUR/USD Technical Analysis:
On the daily chart, the EUR/USD pair remains below a bearish 20 Simple Moving Average (SMA), with the 100 and 200 SMAs also trending downwards. While the Momentum indicator shows slight upward movement, the Relative Strength Index (RSI) remains soft around 42.
Looking at the 4-hour chart, EUR/USD is currently bearish with resistance at the 100 SMA. Technical indicators suggest a potential downward extension towards the 1.0440 support level, followed by 1.0400.
Key Levels to Watch:
Support: 1.0485, 1.0440, 1.0400
Resistance: 1.0560, 1.0625, 1.0660
Analysis:
The EUR/USD pair’s bearish trend is influenced by economic data releases and central bank decisions. Investors should closely monitor upcoming announcements from the Federal Reserve and the ECB as they will impact the currency pair’s movement. A potential downtrend towards 1.0440 is expected, with key support and resistance levels to watch for trading opportunities.