EUR/USD Outlook: Trump’s Policies Lift USD, Fed Rate Cut May Offer Support at 1.0688

During the European session, the EUR/USD pair remained under pressure around the 1.0688 mark, reaching an intra-day low of 1.0678 as the U.S. dollar strengthened following the election of Republican Donald Trump.

The greenback’s gains were driven by Trump’s proposed policies, including potential tax cuts and import tariffs, which are expected to increase inflation and bolster the USD’s long-term outlook. Additionally, market sentiment around the dollar strengthened as investors anticipated higher national debt due to Trump’s fiscal measures.

Just given the coming domestic Trump policies $EURUSD is dead in the water. We can't compete for shit.

And then you add Tariffs and trade-war related matters which will worsen the situation significantly.

We will have massive inflation in Europe in the coming 12-24 months as… pic.twitter.com/LRV5GPbRxl

— AG Squeezer – KBTW87 (@kbtw87) November 11, 2024

Despite the dollar’s recent rally, a potential rate cut by the Federal Reserve could temper the currency’s gains, offering some support to the euro. According to the CME FedWatch tool, there’s a 65% probability that the Fed will reduce interest rates by 25 basis points to a range of 4.25%-4.50% in December, marking a second consecutive rate cut. Investors are also closely monitoring U.S. Consumer Price Index (CPI) data for October, due Thursday, which could influence the Fed’s rate decision and impact the EUR/USD pair.

• USD Support Factors: Trump’s policies, increased inflation expectations.
• Rate Cut Probability: 65% for a December cut.
• Key Data to Watch: U.S. CPI and Fed officials’ speeches.

U.S. Economic Data Strengthens Dollar

Recent economic data from the U.S. has further supported the dollar. The University of Michigan’s Consumer Sentiment Index rose to 73.0 in November, surpassing expectations of 71.0 and signaling optimism among American consumers. Meanwhile, Initial Jobless Claims came in at 221,000 for the week ending November 1, a slight increase from the prior week’s revised total of 218,000, indicating stability in the labor market.

These figures underscore a resilient U.S. economy, though inflation and interest rate expectations remain pivotal. Investors await further insights from Federal Reserve officials on whether a potential rate cut is likely, as this move could weaken the dollar and alleviate some of the pressure on the EUR/USD pair.

• Consumer Sentiment Index: 73.0 in November (above 71.0 expected).
• Jobless Claims: Rose to 221,000, in line with estimates.
• Focus: Inflation and interest rate expectations.

$EURUSD #EURUSD Trump hasn't even started. So, are we going to trade here, below 1.07 for the next 3 or 4 months?

— Hope (@scottsdalem) November 11, 2024

EUR/USD Technical Analysis: Bearish Bias Below Key Resistance

The EUR/USD pair is trading near $1.0712, with a modest 0.06% gain in the last session. The currency pair remains in a consolidation phase within a tight range, facing resistance at $1.0752. The pivot point at $1.0728 serves as a key reference level, reflecting the cautious sentiment in the market. Immediate resistance at $1.0752 aligns closely with the 50-day Exponential Moving Average (EMA) at $1.0759, a critical threshold for any potential upside.

On the downside, support is positioned at $1.0687, with further levels at $1.0655 and $1.0622. Failure to hold above these support levels could see the euro weaken further. Technical indicators signal a mildly bearish outlook, with the Relative Strength Index (RSI) at 36, suggesting the euro is nearing oversold territory. Traders may consider short positions below $1.0811, targeting $1.0745, with a stop-loss set at $1.0855.

• Key Resistance: $1.0752 (50 EMA at $1.0759)
• Immediate Support Levels: $1.0687, $1.0655, $1.0622
• Technical Indicators: RSI at 36, nearing oversold conditions

ABOUT THE AUTHOR See More

Arslan Ali Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.