Created
: 2024.11.05
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EUR/USD Price Forecast: The bearish outlook remains intact below 1.0900
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EUR/USD Price Forecast: The bearish outlook remains intact below 1.0900
New
2024.11.05 15:14
2024.11.05 15:14
2024.11.05 15:14
- EUR/USD trades in positive territory around 1.0880 in Tuesday's early European session.
- The negative outlook of the pair prevails below the 100-day EMA and bearish RSI indicator.
- The immediate resistance level emerges at 1.0931; the first downside target is seen at 1.0800.
The EUR/USD pair remains firmer near 1.0880 during the early European session on Tuesday. The uncertainty surrounding the US presidential election outcome weighs on the Greenback and provides some support to the pair.
"A Republican clean sweep can send the dollar higher, but probably by less than how much a Harris win could hit USD. The dollar might not rally at all if Trump wins but Democrats secure the (U.S. House of Representatives)," noted ING Bank analysts.
Technically, the EUR/USD pair keeps the bearish vibe on the daily chart as the major pair holds below the key 100-day Exponential Moving Averages (EMA). Additionally, the downward momentum is supported by the Relative Strength Index (RSI), which stands below the midline near 47.25, suggesting that the path of least resistance is to the downside.
The 1.0800 psychological level acts as an initial support level for EUR/USD. Further south, the next contention level is seen at the 1.0770-1.0760 region, representing the low of October 24 and the lower limit of the Bollinger Band. A breach of the mentioned level could expose 1.0666, the low of June 26.
On the bright side, the first upside barrier for the major pair emerges near 1.0931, the 100-day EMA. The additional upside filter to watch is 1.0951, the upper boundary of the Bollinger Band. The crucial resistance level is located at the 1.1000 round mark.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB's primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates - or the expectation of higher rates - will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB's 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone's economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Last updated
: 2024.11.05
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