EUR/USD recovers mildly on Friday after posting a fresh 10-week low near 1.0800 on Thursday. The outlook of the major currency pair remains bearish as the Euro (EUR) could face selling pressures on expectations that more interest rate cuts from the European Central Bank (ECB) are in the pipeline.
The ECB reduced its Rate on Deposit Facility by 25 basis points (bps) to 3.25% on Thursday. This was the second straight interest rate cut by the ECB and the third of this year. The central bank was widely anticipated to reduce interest rates further as recent commentaries from various ECB officials suggested that they are more concerned about reviving economic growth, with high confidence over inflation remaining under control.
In the press conference after the interest rate decision, ECB President Christine Lagarde did not offer any cues for likely interest rate action in December but was confident that the disinflation process is well on track. However, traders have priced in an additional 25-bps interest rate cut at the last meeting of this year.
When asked about the likely threats to the Eurozone economy from a victory of former US President Donald Trump in the presidential elections, Lagarde said, “Any trade obstacles were a ‘downside’ for Europe,” Reuters reported. She added, "Any restriction, any uncertainty, any obstacles to trade matter for an economy like the European economy, which is very open," adding that the ECB was also "very attentive" to possible oil price moves linked to the Middle East conflict.
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.15% | -0.28% | -0.15% | -0.03% | -0.24% | -0.26% | 0.02% | |
EUR | 0.15% | -0.11% | 0.02% | 0.12% | -0.11% | -0.10% | 0.18% | |
GBP | 0.28% | 0.11% | 0.12% | 0.24% | 0.02% | 0.02% | 0.26% | |
JPY | 0.15% | -0.02% | -0.12% | 0.14% | -0.10% | -0.13% | 0.14% | |
CAD | 0.03% | -0.12% | -0.24% | -0.14% | -0.22% | -0.23% | 0.01% | |
AUD | 0.24% | 0.11% | -0.02% | 0.10% | 0.22% | -0.02% | 0.24% | |
NZD | 0.26% | 0.10% | -0.02% | 0.13% | 0.23% | 0.02% | 0.26% | |
CHF | -0.02% | -0.18% | -0.26% | -0.14% | -0.01% | -0.24% | -0.26% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
EUR/USD endeavors to hold the immediate support of 1.0800 in European trading hours. The major currency pair extended its downfall after breaking below the 200-day Exponential Moving Average (EMA), which trades around 1.0910, earlier this week.
The downside move in the shared currency pair started after a breakdown of the Double Top formation on a daily timeframe near the September 11 low at around 1.1000, which resulted in a bearish reversal.
The 14-day Relative Strength Index (RSI) dives below 30.00, indicating a strong bearish momentum though entering in oversold conditions.
On the downside, the major could find support near the upward-sloping trendline at 1.0750, which is plotted from the October 3 low around 1.0450. Meanwhile, the 200-day EMA and the psychological figure of 1.1000 will be the key resistances for the pair.
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