- Amidst selling pressure, the EUR/USD exchange rate is expected to witness further losses in the coming days and weeks, as some analysts see that a return to the 1.0780 support level is not impossible.
- The recent losses of the EUR/USD reached the 1.0951 support level before settling around the 1.0970 level at the time of writing, amid anticipation of the announcement of the minutes of the last meeting of the US Federal Reserve and then the US inflation figures.
Regarding the expected price of the EUR/USD in the coming days: According to Tanmay Purohit, technical analyst at Société Générale, the recovery of the US dollar puts an end to the rise of the euro in 2024, at least in the short term. The analyst says: “The EUR/USD pair struggled to overcome the August peak near 1.1200 in a recent attempt to form a double top.”
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EUR/USD Technical analysis and forecast:
Later, the EUR/USD pair gave up the 50-day moving average (1.1050) and fell below the neckline of the pattern, indicating the risk of a deeper decline. These developments come on the heels of strong, better-than-expected US data confirming that the US economy is not on the verge of recession, and that the need for further US rate cuts by the Federal Reserve is not urgent. Therefore, further cuts are certainly coming, but not as intensely and quickly as some had thought. Meanwhile, the European Central Bank will be under pressure to act again amid the slowdown in the Eurozone economy, with successive rate cuts likely at next week’s meeting. Overall, the divergence in interest rate outlook is putting EUR/USD under pressure again, and technical analysts are tasked with assessing the market levels that will come into play. The analyst added, “If EUR/USD fails to reclaim the moving average near 1.1050, the bearish move is likely to extend,” The next potential support levels could be found at 1.0900/1.0870, the 50% retracement level from April and 1.0780.
In the same vein, Fawad Razaqzadeh, FX analyst at City Index, said: “The technical outlook for EUR/USD has turned bearish.”
He explained that EUR/USD has now broken the 1.1000-1.1025 support zone, meaning it has created a temporary low. “Unless the exchange rate rises above this zone, the path of least resistance remains to the downside despite the slight uptick in prices so far this week,” the analyst said. He added that the next key support level to watch is around 1.0900, followed by the 200-day moving average around 1.0875.
On the stock trading front, US futures flat after market recovery U.S. stock futures were little changed on Wednesday after a rally led by technology stocks on Wall Street in the previous session. In regular trading on Tuesday, the S&P 500 and the Nasdaq Composite jumped 0.97% and 1.45%, respectively. Meanwhile, the Dow Jones Industrial Average rose 0.3%. Nine of the 11 sectors in the S&P 500 ended higher, led by technology, telecommunications services and consumer discretionary stocks. Also, Tech giants such as Nvidia (4.1%), Apple (1.8%) and Meta Platforms (1.4%) were notable performers. Meanwhile, energy and materials stocks, including Exxon Mobil (-2.7%), Chevron (-1.6%) and Southern Copper (-3.8%), fell. Clearly, the moves came after a strong U.S. jobs report last week raised hopes that the Federal Reserve will deliver a soft landing. Also, investors reacted to the sharp drop in oil prices, while the US 10-year yield remained above 4%. However, investors expect more volatility in the run-up to the US presidential election. Now, markets are looking ahead to the latest Federal Reserve meeting minutes and major bank earnings.
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