- The EUR/USD price attempted a recovery above 1.1600 amid a weakening US dollar.
- Prolonged geopolitical instability could accelerate the dollar and weigh on the euro.
- Traders look forward to comments from FOMC members for insight about the policy cues and economic outlook.
The EUR/USD forecast highlights an effort to find acceptance above 1.1600 amid expectations of Fed rate cuts, cooling European bond markets, and easing risk sentiment.
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The Fed’s Powell remarked on curbing labor market weakness while inflation remains controlled. This reinforced expectations of Fed easing of a 25bps cut, one this month and another in December. This shift weighed on the dollar and strengthened the euro.
From France, after PM Sebastian Lecornu suspended the pension reform, increasing the chances of the no-confidence vote. Consequently, this narrowed the French-German 10-year yield spread below 80 points, dismissing key risk for the euro. It seems that investors have recovered from the earlier French political upheaval.
However, if US data releases surprise the markets or expectations of Fed easing change, the dollar could climb, devaluing the euro. The French government is still navigating budget approval issues; any setback could trigger further risks.
On the other hand, broader global instabilities like US-China trade frictions, the Russia-Ukraine war, and international economic concerns could affect the risk appetite and capital flows.
EUR/USD Key Events Ahead
The significant events in the day include
- Eurozone Industrial Production
- FOMC Schmid’s speech
- FOMC Waller’s speech
- FOMC Miran’s speech
- Consumer Price Index
- The Fed’s beige book
Traders look ahead to speeches from FOMC members Schmid and other officials for clear policy direction.
EUR/USD Technical Forecast: Holds Key Support, Aiming for 1.1750
The EUR/USD 4-hour chart suggests a mildly positive trend, showing the price above the 1.1600 support zone. The key moving averages indicate a bearish bias, with the 50-period MA below the 100- and 200-period MAs..
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The RSI is at 55, which signals the pair has jumped out of negative territory. This suggests that staying above the 1.1600 level could gather further buying traction and allow the target to be 1.1700. A breach above 1.1700 could shift the trend and extend the upside towards 1.1750.
On the flip side, 1.1550 remains a tough support for the pair. If broken, it could open the path towards the psychological mark of 1.1500 and 1.1430. However, the path of least resistance lies on the upside.
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