EUR/USD Still Under Pressure: Understanding Market Dynamics

26 בנוב׳ 2024

EUR/USD has recouped some of its daily losses, hovering around 1.0510 during the London trading session. Initially, the currency pair experienced a decline in response to deteriorating market sentiment triggered by President-elect Donald Trump's announcement of a proposed 25% tariff on imports from Mexico and Canada, as well as a 10% increase on all Chinese imports entering the United States. While the pair has made some recovery during the London session, a bearish outlook persists.

The currency pair has suffered a substantial decline from the 1.0900 mark and faced resistance at the 1.0400 level, which serves as a key demand zone. There is potential for further downward movement, with the next significant demand area identified at 1.0100.

Federal Reserve Bank of Chicago President Austan Goolsbee has indicated that the Federal Reserve is likely to pursue a strategy of lowering interest rates towards a neutral stance, one that neither stimulates nor restricts economic growth.

Meanwhile, market expectations have fully incorporated a 25 basis point cut by the European Central Bank (ECB) in December. Moreover, the probability of a more significant 50 basis point reduction has surged to 58%, reflecting growing market concerns about the economic outlook in the region.

From our perspective, further declines in the currency pair could be anticipated.


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