EUR/USD Surges Ahead of ECB Rate Decision and US CPI Data This Week
- ECB expected to lower rates by 25 basis points on Thursday
- US CPI forecasted to increase to 2.7% by Wednesday
- EUR/USD trading above the 20 SMA
The U.S. dollar is gaining momentum, approaching the 10580 mark as market participants anticipate Thursday's ECB interest rate decision and upcoming US inflation data.
The market consensus suggests that the ECB will cut rates by 25 basis points to 3%, as numerous policymakers express concerns regarding the potential risks of inflation falling short of targets amid a subdued economic outlook for the Eurozone.
Recent economic indicators from the Eurozone reveal a dimmer situation, notably with PMI data slipping to a ten-month low.
In France, the economic horizon appears increasingly bleak following the recent collapse of the government, compounding the region's challenges.
On the other hand, the US dollar is facing slight declines after a robust performance in the previous week. In light of last Friday's non-farm payroll figures and remarks from Federal Reserve Chair Jerome Powell, the market is currently pricing in an 80% likelihood of a 25 basis point rate cut at the upcoming meeting next week, according to the CME FedWatch Tool.
This week's focus will be on the US consumer price index data, which is projected to show an uptick to 2.7% in November from 2.6%, while core CPI is expected to remain steady at 3.3%.
EUR/USD Technical Analysis
EUR/USD has rebounded from last week’s low of 1.0330, currently stabilizing between the 1.450 and 1.060 range.
With prices now exceeding the 20 SMA and the RSI trending upwards, there is optimism for further upward movement.
A breach above 1.060 is necessary to challenge resistance towards 1.070.
If sellers cannot reclaim 1.060, a retreat towards 1.050 could emerge, with 1.0450 as a notable support level.
Oil Prices Rise on Geopolitical Tensions and China's Policy Shift
- China implements a more relaxed monetary policy
- Syrian rebels claim victory over President Bashar al-Assad
- Oil shows signs of recovery from the 67.50 support level
Oil prices climbed by 1% on Monday following China's announcement of a shift towards a looser monetary policy, the first of its kind since 2010, aimed at revitalizing economic growth.
This move is expected to stimulate growth in China, which has struggled with a downturn in the property market affecting confidence and consumption. This slowdown was a significant factor in OPEC+'s recent decision to delay output increases until the second quarter of 2025.
An official report from a recent meeting of senior Communist Party officials indicates China's intention to adopt a moderately loose monetary policy similar to strategies employed during the global financial crisis of 2010.
Additionally, the geopolitical landscape has shifted with the overthrow of Syrian President Bashar al-Assad by rebels, escalating political uncertainty in the region, which is further supporting oil prices.
In related news, Saudi Aramco has lowered its January 2025 prices for Asian buyers to their lowest levels since 2021.
Oil Technical Analysis
Oil continues its trade within a familiar range, with resistance at the 71.50 to 72.50 levels and support found at 67 to 67.50. Having bounced off the support zone, sellers will need to breach 67.50 to extend declines towards 65.25, the low from September, and target 63.60, May 2023's low.
For a significant recovery, prices must regain the 50 SMA and establish a foothold above the 71.50 mark to open the pathway towards the 75.00 level.
