US Dollar Outlook: EUR/USD
EUR/USD is making an effort to recover from its recent decline, bouncing back from a new monthly low of 1.0453. However, maintaining this upward momentum may prove challenging as the pair continues to exhibit a pattern of lower highs and lower lows.
US Dollar Forecast: EUR/USD Seeks to Reverse Five-Day Decline
The EUR/USD exchange rate is likely to remain influenced by the downward trend of the 50-Day Simple Moving Average (SMA) at 1.0697. The pair has moved outside of December’s opening range, and the post-US election weakness may persist, especially with the rate lingering below the moving average.
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US Economic Calendar
Despite the current market sentiment, the Federal Reserve’s upcoming rate decision could significantly impact EUR/USD. Analysts expect the central bank to lower US interest rates by an additional 25 basis points in its final meeting of 2024. If the Federal Open Market Committee (FOMC) maintains a neutral approach, it could further apply downward pressure on the US Dollar.
Should the FOMC continue on a path to unwind its restrictive policy into 2025, EUR/USD may oscillate within the range observed in November. However, a potential bullish response in the Greenback could occur if the Fed’s Summary of Economic Projections (SEP) indicates an upward revision in the interest rate dot-plot.
EUR/USD Chart – Daily
- EUR/USD struggles to stay within December's opening range, continuing to create lower highs and lows. A decisive break below the 1.0448 (2023 low) and 1.0480 (100% Fibonacci extension) may increase the likelihood of a drop towards 1.0370 (38.2% Fibonacci extension).
- If the pair breaks below the yearly low of 1.0333, it could lead to a targeting of 1.0200 (23.6% Fibonacci retracement). Nevertheless, a lack of momentum to drop below the 1.0448 to 1.0480 region might confine EUR/USD within the bounds of November's range.
- A close above the region of 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) is necessary to bring the area around 1.0660 (61.8% Fibonacci extension) back into focus, with 1.0710 (50% Fibonacci extension) positioned as the next significant level.
Additional Market Outlooks
USD/JPY Experiences Five-Day Rally for the First Time Since June
Gold Price Analysis: Bullion Remains Below Prices Preceding US Elections
Canadian Dollar Analysis: USD/CAD Reaches New Yearly High
GBP/USD Analysis: Outlook Rests on the Break of December's Opening Range
--- Analysis provided by David Song, Senior Strategist
