Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1385.
- Add a stop-loss at 1.1605.
- Timeline: 1-2 days.
Bullish view
- Sell the EUR/USD pair and set a take-profit at 1.1605.
- Add a stop-loss at 1.1385.
The EUR/USD exchange rate continued its retreat even as odds of Federal Reserve interest rate cuts remained. It dropped to 1.1520, its lowest level since November 5 as focus shifts to the upcoming US macroeconomic data.
Federal Reserve Rate Cut Odd Rise
The EUR/USD exchange rate remained under pressure as odds that the Federal Reserve will cut interest rates in December rose. These odds jumped to 75% in Polymarket after Christopher Waller, a senior Fed official, made the case for cutting rates.
In an interview, Waller, who is one of the officials seeking to replace Jerome Powell as Fed Chair, maintained that the bank should cut interest rates. He pointed to the labor market, which he believes is weakening because of the restrictive policies.
Waller’s statement echoed that of New York’s John Williams, who noted that the bank should cut interest rates. Still, some other Fed officials like Beth Hammack and Michael Barr have noted that the bank should maintain high interest rates.
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The EUR/USD pair also retreated as tensions between the US and Europe continue. In a statement, Howard Lutnick said that the EU will need to change its digital regulations to get a deal to lower steel and aluminium tariffs.
Looking ahead, the next key catalyst for the pair will be the upcoming US consumer confidence data. Economists expect the data to show that consumer confidence dropped to 93.5 in October from the previous 94.6.
Consumer confidence is an important metric that can help to predict the country’s economic growth and spending. The US will also publish the latest retail sales and pending home sales data.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has come under pressure in the past few days. It was trading at 1.1520, an important level as it was along the ascending trendline that connects the lowest swings since August 1.
It has moved below the 50-day Exponential Moving Average (EMA) and is along the 23.6% retracement point. It has dropped below the Supertrend indicator, a sign that bears are in control.
Therefore, the pair will likely have a bearish outlook, with the next key target to watch being at 1.1385, its lowest level in August. A move above the 50-day moving average at 1.1600 will invalidate the bearish outlook.
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