EUR/USD Drops to $1.0495 as ECB Rate Cut Looms, US CPI in Focus

With inflation perceived as under control, the ECB is focusing on sluggish economic activity and weak domestic demand. Concerns over the impact of potential tariffs from U.S. President-elect Donald Trump and subdued export performance add further pressure on the Euro. Markets are closely watching ECB President Christine Lagarde’s post-meeting comments for guidance on future monetary policy, especially amid ongoing political uncertainties in Germany and France.

USD Gains on CPI Anticipation and Strong Momentum

On the other hand, the U.S. Dollar continues its rally, bolstered by optimism surrounding the November Consumer Price Index (CPI) data expected later today. The U.S. Dollar Index (DXY), which measures the Greenback against a basket of currencies, surged above 106.50, marking its fourth consecutive day of gains. Strong dollar momentum is a key factor weighing on EUR/USD, with markets betting on a robust U.S. inflation report.

The dollar’s strength also reflects investor confidence in the Federal Reserve’s policy trajectory. Despite recent rate cuts by the Fed, traders are anticipating stable inflation figures, which could reaffirm the dollar’s dominance in the near term.

EUR/USD Technical Analysis: Critical Levels in Focus

EUR/USD remains bearish, trading near $1.0507 and testing key support levels. The pair’s break below an upward trendline signals sustained weakness.

• Immediate Resistance: $1.0536

• Next Resistance: $1.0606

• Immediate Support: $1.0466

• Next Support: $1.0392

The 50 EMA at $1.0536 indicates mild bearish momentum, while the 200 EMA at $1.0568 adds resistance overhead. RSI at 39.81 suggests oversold conditions, hinting at potential consolidation.

Failure to reclaim $1.0536 could deepen losses toward $1.0466 or lower. Conversely, a breakout above resistance may indicate recovery potential, but sentiment remains cautious amid ongoing bearish pressures.