EUR/USD remains fragile near the immediate support of 1.0800 due to multiple headwinds, such as firm US Dollar (USD) and escalating European Central Bank (ECB) dovish bets. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, clings to gains near a fresh 11-week high around 104.00. The Greenback gains on United States (US) presidential election jitters and growing expectations that the Federal Reserve (Fed) will follow a moderate policy-easing cycle.
Latest polls have shown a neck-to-neck competition between former US President Donald Trump and Vice President Kamala Harrish ahead of elections, which are just two weeks away. Trump's victory is expected to result in higher import tariffs and lower taxes, which could prompt the Fed to raise interest rates further.
Meanwhile, the Fed is expected to cut interest rates by 25 basis points (bps) in November and December, according to the CME FedWatch tool. The reasoning behind firm speculation for a slower rate-cut cycle is investors’ growing confidence in US economic resilience after upbeat Nonfarm Payrolls (NFP), ISM Services PMI, and the Retail Sales data for September. Also, Fed officials see a gradual rate-cut path as appropriate.
This week, investors will keep an eye on the preliminary S&P Global Purchasing Managers Index (PMI) data for October, which will be published on Thursday.
EUR/USD struggles to hold the immediate support of 1.0800 in European trading hours. The outlook of the major currency pair remains uncertain as it trades below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.
The downside move in the shared currency pair started after a breakdown of a 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. However, a recovery move remains on the cards as conditions turn oversold.
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.
The European Central Bank's President Christine Lagarde, born in 1956 in France, has formerly served as Managing Director of the International Monetary Fund, and minister of finance in France. She began her eight-year term at the helm of the ECB in November 2019. As part of her job in the Governing Council, Lagarde holds press conferences in detailing how the ECB observes the current and future state of the European economy. Her comments may positively or negatively the Euro's trend in the short term. Usually, a hawkish outlook boosts the Euro (bullish), while a dovish one weighs on the common currency (bearish).
Read more.Next release: Tue Oct 22, 2024 14:30
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Source: European Central Bank
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