EUR/USD Price Analysis: Can Powell’s Rate Flexibility Lift Euro Above $1.0599?
On Friday, the EUR/USD pair ended a five-day losing streak, rising to $1.0577.
This uptick was supported by a retreat in the US Dollar following comments from Federal Reserve Chair Jerome Powell, who highlighted the “remarkably good” performance of the US economy. Powell’s remarks suggest that the Federal Reserve may have room to gradually reduce interest rates, easing some pressure on the dollar.
Further supporting the euro, the US Producer Price Index (PPI) rose by 2.4% year-over-year in October, exceeding both the September figure of 1.9% and market expectations of 2.3%. Core PPI also increased to 3.1%, slightly above forecasts, hinting that inflation remains steady without triggering aggressive rate hikes.
As a result, the US Dollar Index (DXY) dipped from its yearly high of 107.06 to around 106.80, signaling a slowdown in the “Trump trade” that previously pushed the dollar higher.
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Optimistic Eurozone Outlook Provides Boost for EUR/USD
The European Commission’s latest quarterly report projects steady growth for the Eurozone over the next few years, anticipating an expansion of 0.8% in 2024, 1.3% in 2025, and 1.6% in 2026. Inflation is expected to ease, dropping from 2.4% in 2024 to 1.9% in 2026, while the budget deficit may narrow from 3.0% to 2.8% by 2026.
However, Germany’s slower economic performance remains a concern; the region’s largest economy is expected to contract by 0.1% in 2024 before posting moderate growth of 0.7% in 2025.
The European Central Bank (ECB) has maintained a cautious stance on rate cuts, citing high wage growth and sluggish labor productivity.
ECB board member Isabel Schnabel recently noted that interest rates should remain the main policy tool, indicating that the ECB may not rush to lower rates despite recent growth forecasts.
Technical Levels for EUR/USD – November 15, 2024
EUR/USD is currently trading near $1.0563, consolidating after a recent downtrend. The pair faces immediate resistance at $1.0599, aligned with the 50-day EMA. Should EUR/USD break this level, further resistance points are at $1.0636 and $1.0680.
On the downside, support lies at $1.0514, with additional levels at $1.0472 and $1.0422, suggesting the pair could face further declines if selling pressure resumes. The Relative Strength Index (RSI) is around 48, indicating neutral momentum but hinting at a potential bullish turn if it surpasses the 50 level.
Key Takeaways
US Dollar Impact: Powell’s comments signal rate flexibility, easing dollar strength.
Eurozone Growth: Optimistic projections bolster EUR/USD, though Germany’s slowdown remains a concern.
Technical Outlook: Resistance at $1.0599; support at $1.0514, with RSI at 48 indicating a neutral stance.
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