The EUR/USD currency pair stabilizes at the 1.0800 level, yet its future trajectory appears unclear due to expectations surrounding the European Central Bank’s (ECB) monetary policy. The Eurozone’s economic growth is projected to remain sluggish, while the US Dollar’s performance is expected to shift significantly in the context of the upcoming US presidential elections.
Currently, EUR/USD is facing difficulties in maintaining upward momentum, having retraced to 1.0850 after struggling to surpass the resistance of 1.0870 during the European session. This retracement may lead the pair back to its recent low near 1.0800 as market sentiment leans towards further ECB interest rate cuts. With growth in the Eurozone showing signs of weakness and inflation running below the ECB’s target, speculations of a rate decrease in December are gaining traction.
Recent comments from ECB officials highlight concerns about economic growth potentially dampening inflationary pressures further. Revised forecasts from the ECB’s Survey of Professional Forecasters indicate a downward adjustment in expected price growth for the upcoming year, reflecting increased market confidence in subdued inflation.
In terms of the US Dollar, projections suggest it may strengthen following a brief correction. The US Dollar Index recently reached an 11-week peak near 104.00, bolstered by robust economic indicators. Anticipation of a mild interest rate reduction path from the Federal Reserve has also contributed to this positive outlook for the Greenback, with expectations of a 50 basis points cut by the end of the year.
As the political landscape shifts with the approach of the US elections, the volatility of the US Dollar could increase. Latest polling trends indicate Democratic Vice President Kamala Harris is currently leading over former President Donald Trump.
From a technical perspective, the EUR/USD pair is attempting to find stability around 1.0800. Trading below the 200-day Exponential Moving Average emphasizes the uncertain outlook following a breakdown from a significant Double Top pattern. The Relative Strength Index indicates strong bearish momentum, though oversold conditions may prompt some recovery. Support may emerge around 1.0750, while resistance levels are set at the 200-day EMA and the psychological barrier of 1.1000.
