Euro Outlook: EUR/USD
Recent developments indicate a shift in the EUR/USD exchange rate, with the pair breaking the pattern of higher highs and lows that characterized last week’s trading. Following an attempt to regain footing above the April low support zone (1.0601), factors surrounding the upcoming European Central Bank (ECB) meeting are likely to contribute to the current weakness in the exchange rate as market participants anticipate a continuation of the bank’s easing strategies.
EUR/USD Monthly Opening Range Remains in Play as ECB Decision Approaches
The EUR/USD pair has faced challenges in maintaining its position after a brief reaction to the recent US Non-Farm Payrolls (NFP) data. However, expectations surrounding the upcoming US Consumer Price Index (CPI) release suggest limited impact on the exchange rate, particularly as the core inflation rate is projected to remain stable at 3.3% for November.
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Euro Economic Calendar
The forthcoming ECB meeting is expected to exert significant influence on the EUR/USD exchange rate, as the Governing Council is predicted to lower the benchmark interest rate from 3.25% to 3.00%. Any indications from President Christine Lagarde and her colleagues suggesting an openness to further monetary stimulus could weigh on the Euro, particularly amid ongoing economic uncertainties in the Eurozone.
Should the ECB signal a readiness to normalize monetary policy over the course of 2025, the EUR/USD may retrace its gains from the previous week’s low of 1.0461. Conversely, a more hawkish approach towards the expected rate cut could incite a bullish response from the Euro, mitigating speculation regarding further rate reductions.
EUR/USD Daily Chart Analysis
- Throughout the first week of December, EUR/USD managed to breach the previous support zone around the April low (1.0601), but momentum appears restrained as the pair reverses the recent upward trend.
- A lack of strength in surpassing the range between 1.0580 (78.6% Fibonacci extension) and 1.0610 (38.2% Fibonacci retracement) may prompt a decline towards the zone of 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension). A decisive break below 1.0370 (38.2% Fibonacci extension) could expose the yearly low at 1.0333.
- Market watchers will be interested in the 1.0200 level (23.6% Fibonacci retracement) as a key support point; meanwhile, a close above the 1.0580 to 1.0610 area could signal a rally back towards 1.0660 (61.8% Fibonacci extension).
- A sustained break above 1.0710 (50% Fibonacci extension) could open the door to levels around 1.0770 (38.2% Fibonacci extension), with the next potential resistance area located between 1.0830 (23.6% Fibonacci extension) and 1.0880 (23.6% Fibonacci extension).
Additional Market Insights
Forecast for USD/CAD: Canadian Dollar Faces Pressure from Potential BoC Rate Cuts
Analysis of GBP/USD: Ongoing Vulnerability to Bearish Trends
Outlook for AUD/USD: Australian Dollar Nears Yearly Low Ahead of RBA Decisions
Gold Price Perspectives Complicated by Flattening of the 50-Day SMA
--- Prepared by David Song, Senior Strategist
