Since last week's trading, the exchange rate of the euro against the US dollar EUR/USD has been determined within the framework of a constructive technical preparation, and some analysts expect a rise to the psychological resistance of 1.10. However, it will not be smooth sailing this week given the imminent release of several important US economic data, as well as Eurozone inflation figures. Moreover, the rebound gains of the EUR/USD pair stopped at the resistance level of 1.0963 and is stable around the level of 1.0945 at the time of writing the analysis, awaiting anything new. Overall, although the EUR/USD rate has risen, momentum appears to be slowing, with last week's gain of 0.22% overshadowing the previous week's rise of 2.0%. However, the general outlook is still bullish, awaiting anything new.
Euro price expectations in the coming days:
In this regard, Fouad Razaqzadeh, an analyst at City Index, says, “The EUR/USD pair may rise if inflation in the euro zone weakens further, as this is likely to increase appetite for European stocks and provide indirect support to the risk-sensitive euro.” Therefore, a trend towards 1.10 on EUR/USD remains possible.”
Also in this regard, Sean Osborne, senior forex analyst at Scotiabank, says that the price of the euro against the dollar seems more consistent at the present time, as the marginal gains achieved last week indicate “some increasing resistance to the euro’s advance around the noticeable rebound resistance at 1.0960 (61.8). % Fibonacci for EUR H2).” Adding, “The fundamental trend dynamics remain bullish, and continue to indicate limited scope for euro weakness and continued pressure to extend euro gains,” he added. Above resistance 1.0960, targeting resistance 1.11. Support is 1.0870/75; Losing support here may lead to corrective losses for the euro towards 1.0775. “
On the front of what will impact the euro this week, European Central Bank President Christine Lagarde's testimony before the Economic and Monetary Affairs Committee of the European Parliament is noteworthy early in the week, likely to attract some attention in financial circles. However, we expect her to maintain a stance that it is too early to discuss interest rate cuts at the European Central Bank.
The most important data release is the rapid inflation for the Eurozone Consumer Price Index for November, scheduled for Thursday. However, it‘s expected to show further declines in the headline and core measures to 2.8% and 3.9%, respectively.
If the data surpasses expectations, we anticipate the market reflecting some bets on interest rate cuts by the European Central Bank, which have recently grown and could boost the euro's appeal. Furthermore, the reporting cycle for the Eurozone Consumer Price Index begins one day before with the release of state-level numbers, often setting the market tone.
Spain, often considered a key indicator for broader inflation trends in the Eurozone, will also release numbers on Wednesday, meaning forex movements may start midweek. Commenting on the data and its impact, Valentin Marinov, Head of Forex Analysis at Crédit Agricole, says, "Given the strength of market expectations, the euro can benefit from any upward surprises in inflation and/or more resistance from the European Central Bank to expectations of interest rate cuts, especially if it helps enhance its attractiveness for interest rates."
On the other hand, expectations are largely on the shoulders of the United States this week, as the crowded economic calendar is expected to provide more signals on whether the economy is cooling enough to meet expectations of U.S. interest rate cuts in 2024. Thus, the Increasing expectations for such cuts recently boosted global investor sentiment. Simultaneously, this supporting the risk-supportive pound and undermining the U.S. dollar, considered a safe haven.
Nearby, weekly jobless claims will be announced on Thursday, and investors will wonder if last week's decline was just a surprise, meaning another sudden drop could cause some tension, supporting the U.S. dollar. Personal spending growth is also expected to decline to 0.2% in October after the significant 0.7% increase in September. Meanwhile, the release of the Federal Reserve's preferred inflation data is scheduled for Thursday, and it is likely to reflect declines in both headline and core measures to 3.1% and 3.5%, respectively.
Also, watch the speakers from the U.S. Federal Reserve as they present their cases before the blackout period for the Federal Open Market Committee (FOMC). Clearly, the most prominent will undoubtedly be Federal Reserve Chairman Jerome Powell, who will speak twice on Friday. Commenting on this event, Han-Joo Ho, an economist at Lloyd's Bank, says, "Although it is unlikely that the Federal Reserve will change interest rates at its final policy meeting of the year next month, markets will listen carefully to the strength of policymakers in the face of expectations of interest rate cuts in 2024.”
EUR/USD Analysis Today:
There is no change in my technical view that the EUR/USD is on an upward rebound path, and breaking the psychological resistance of 1.1000 is important for increasing the bulls’ control over the trend and portends a stronger upward movement. Moreover, the next important stations for the bulls will be the resistance levels 1.1085, 1.1120, and 1.1200, respectively. Obviously, these are sufficient levels for all technical indicators to move towards strong levels of saturation with purchase. On the other hand, over the same daily timeframe, the euro/dollar will move towards the support level of 1.0820. therefore, it is important for the bears to confirm the return in control.
Finally, The Euro/Dollar price may remain in its current range until the reaction to important data and events this week.
