EUR/USD Surges Above 1.1100: Fed Rate Cut Expectations Fuel Euro’s Rise

In the early hours of the Asian session on Thursday, the EUR/USD pair showcased a significant rally, surpassing the crucial psychological benchmark of 1.1100. This surge is primarily driven by the weakening of the US Dollar (USD), boosting the major currency pair. Currently, EUR/USD trades at 1.1109, marking a modest increase of 0.03%. As traders shift into holiday mode, a tranquil market environment is anticipated for the week.

Fed Rate Cut Projections Propel Euro to Six-Month High

The potential for interest rate cuts by the Federal Reserve (Fed) in the coming year continues to spur a risk-on rally, elevating the Euro (EUR) to its highest point since July. Cooling inflation figures have played a key role in shaping the Fed’s stance on rate adjustments for 2024, with the market fully pricing in rate cuts for the Fed’s March and May meetings, as indicated by the CME FedWatch Tool.

ECB’s Lagarde Maintains Hawkish Stance Amid Inflation and Wage Growth

European Central Bank (ECB) President Christine Lagarde’s recent comments have been decidedly hawkish. In her latest address, she emphasized the persistence of inflation pressures and robust wage growth in the Eurozone, warning against premature rate cuts. Lagarde’s stance underscores the ECB’s commitment to data-driven policy decisions, emphasizing a cautious approach in the face of market and temporal pressures.

Key US Economic Reports to Influence EUR/USD Movements

Market participants are focusing on upcoming US economic releases, including weekly Jobless Claims, Trade Balance, and the November Pending Home Sales report, all due on Thursday. Despite the holiday season’s limited trading activity, these reports, alongside evolving central bank policies, are expected to impact the EUR/USD pair.

Bullish Outlook for EUR/USD Confirmed by Technical Indicators

Technical analysis reinforces a bullish forecast for the EUR/USD pair. The recent breach and subsequent close above the 1.1080 level bolster expectations for a continued upward trend in both the intraday and short-term periods. The next targets for gains are projected at 1.1145 and 1.1200.

This bullish perspective is supported by the 50-day Exponential Moving Average (EMA50), although temporary sideways fluctuations may occur due to stochastic negativity. It’s crucial to note that a break below 1.1080 could halt this positive trajectory and lead to a downward trend.

Today’s expected trading range is between 1.1060 support and 1.1200 resistance, with the trend predominantly bullish.

EUR/USD Live Chart