Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.0200.
- Add a stop-loss at 1.0600.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.0465 and a take-profit at 1.0550.
- Add a stop-loss at 1.0300.
The EUR/USD exchange rate continued falling after a series of weak economic numbers from Europe. It slumped to a low of 1.0330, its lowest point since November 2022, and 7.80% from its highest point this year.
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European Economic Woes Continue
The EUR/USD exchange rate continued its strong downtrend after more economic data pointed to more weakness from Europe.
According to the German statistics agency, the economy contracted by 0.3% in the third quarter after falling by 0.2% in Q2. Its quarterly growth of 0.1% was lower than the median estimate of 0.2%.
More data showed that the German economy is still struggling as the manufacturing PMI rose slightly to 43.2 in November. While this figure was higher than the median estimate of 43.1, it is a sign that the industry is in a contraction zone.
The German services PMI also contracted, falling from 51.6 in October to 49.4, lower than the median estimate of 51.8.
Similarly, in France, the second-biggest economy in Europe, the manufacturing and services PMI numbers dropped to 43.2 and 45.7, respectively. These figures were lower than the median estimates of 44.6 and 49.0.
In Europe, the manufacturing PMI fell to 45.2, while the services figure dropped to 49.2. These numbers are a sign that the recent ECB interest rate cuts are not leading to strong growth in the region. As such, there are signs that the bank will need to cut rates more to support the ailing economy.
Europe is also facing geopolitical risks in the US, where Donald Trump has threatened more tariffs.
The key events to watch this week will be the Federal Reserve minutes and the US PCE inflation data.
EUR/USD Technical Analysis
The EUR/USD exchange rate has been in a strong downtrend, reaching its lowest level since December 2022. It has dropped below the key support level at 1.0450, its lowest point in October last year. This price was also the lower side of the double-top pattern at 1.1200.
The pair has formed a death cross as the 200-day and 50-day moving averages crossed each other. Also the MACD indicator has dropped below the zero line, while the Relative Strength Index (RSI) has dropped below 30.
The pair will likely continue falling as sellers target the next psychological point at 1.0200. This view will become invalidated if the pair rises above the key point at 1.0550.
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