According to Forex currency market trading, The EUR/USD rally suffered a setback last week. Furthermore, the uptrend remains intact from a technical perspective, and a weak US e market report on Friday may provide a rebound. Last week, the rebound gains for the Euro/Dollar reached the resistance level of 1.1016, its highest level in three months. Moreover, with the last three trading sessions, EUR/USD moved amid profit-taking selling operations to the support level of 1.0804. obviously, this is closest to breaking the psychological support of 1.08, which we mentioned in the technical analysis as possible for this to happen. Ahead of an important market event this week, represented by the US job numbers, which will have a strong and direct reaction to the future tightening policy of the US Federal Reserve.
Will the EURO market price rise in the coming days?
Commenting on this, Tanmay G. Purohit-an analyst at Société Générale, says: “The EUR/USD pair witnessed a short pause after reaching the temporary resistance level at 1.0960.” He added, “flat” 200-day moving average indicates, at the same time, a temporary pause in the recent upward trend, which may r in weak price movement in the coming days. Thus, any weakness may return the euro/dollar rate to the 1.0750 level, which is expected to be support for the exchange rate in the short term.” Finally, “Defending this could lead to a continued move higher,” the analyst added. The upside targets are 1.0960, then 1.1065, then 1.1080, respectively.
We mentioned in our recent analysis of the currency pair that December is usually a favourable month for the euro against the dollar, as MUFG research showed that December 14 of the past 20 years witnessed a rise in the price of the EUR/USD pair, and the average gains during those 14 occasions were “Impressive” 2.6%. therefore, the seasonality is linked to the Santa Rally phenomenon, where global stock markets usually advance in the last month of the year, which is not favourable for the US dollar. Furthermore, seasonality calls for bullishness for the euro against the dollar. moreover, George Saravelos-an analyst at Deutsche Bank, warns, “the euro price faces increasing headwinds in the form of growing bets on interest rate cuts by the European Central Bank”.
In general, markets are increasingly confident that the European Central Bank will be the first major central bank to cut interest rates after euro zone inflation data released last week showed that inflation is falling rapidly to the ECB's target of 2.0%. also, Deutsche Bank has argued in recent months that there is a real possibility that the European Central Bank will be forced to cut interest rates before the Fed. Recently, economists at the bank believe that inflation trends point to the risk of the European Central Bank cutting interest rates once the first quarter rises.
Overall, there will be nothing from the Eurozone this week to counter these expectations, the United States is where the focus lies. The main macroeconomic event in the Forex market will be the US non-farm payrolls report on Friday, which will indicate the extent of the “lax” US Labor market. In this regard, the market consensus sees a reading of 175 thousand, and if the number is below that by a suitable margin. Recently, the sell-off in the dollar could extend as this would confirm the recent rise in expectations for the number of Fed interest rate cuts due in 2024.
Meanwhile, according to trading the price of the dollar has declined over the past four weeks, as the market expects an increasing amount of interest rate cuts by the Federal Reserve in 2024. Now, the market expects more than 100 basis points of interest rate cuts. Also, the market will raise expectations if US m market data is weak, which will affect the dollar price. Obviously, if US payrolls come out stronger than expected, the market may reverse some of its recent assumptions and lead to a significant rebound in the dollar price.
EUR/USD Analysis Today:
As we mentioned in the technical analyses of the EUR/USD currency pair, the bears’ control over the trend will increase by breaching the psychological support 1.0800. thus, EUR/USD paves the way for a stronger downward move, and the next most important support stations will be 1.0760 and 1.0680, respectively. Obviously, it is sufficient to push some technical indicators towards oversold levels. Thus, it is possible to think about returning to buying the currency pair from the second level and below. As we mentioned before, the currency pair will remain on its downward path until the reaction to the announcement of important American jobs numbers at the end of the week. Today, the Euro-dollar will react to the announcement of the reading of the PMI for services for the euro zone economies. Also, it will react to the reading of the ISM PMI for US services and the first US jobs data.
On the other hand, according to the performance on the daily chart, psychological resistance of 1.10 will be an important station for EUR/USD bulls to control the trend again.
