EUR/USD Forecast: Advances on weak US data, dovish Fed rate cut outlook

EUR/USD moves higher on Tuesday, gaining 0.40% on the day to trade near 1.1570 at the time of writing, supported by persistent buying interest following US data releases. The move higher reflects a macroeconomic backdrop increasingly favorable to the Euro (EUR), as newly released US data reinforces the narrative of a cooling US economy and a forthcoming shift toward monetary easing by the Federal Reserve (Fed).

The latest ADP figures showed that private employers shed an average of 13,500 jobs per week over the four weeks ending November 8, signaling a labor market losing momentum. ADP’s chief economist Nela Richardson noted that consumer strength “remains in question heading into the holiday hiring season”, echoing the recent slowdown in hiring dynamics.

Fresh Producer Price Index (PPI) data added to this picture. Headline PPI rose 2.7% YoY, in line with expectations. Core PPI slowed down to 2.6%, revealing some disinflationary developments, though not enough to alter the broader policy outlook. On a monthly basis, headline PPI printed at 0.3%, while core PPI registered 0.1%, a benign reading for most market participants.

Meanwhile, US Retail Sales disappointed with a 0.2% monthly increase in September, well below expectations of 0.4%. The slowdown comes after a strong August but reinforces the view of a more cautious consumer, adding to the expectation of softer growth in the fourth quarter.

These data points were accompanied by strongly accommodative comments from Fed Governor Stephen Miran, who stated that “the economy calls for large interest rate cuts” and argued that rising unemployment is the result of monetary policy being “too tight.” Miran also said he hopes the weakness in job figures will “convince” other policymakers to support a rate cut in December. His tone adds weight to already elevated expectations of at least a 25-basis-point reduction at the December meeting.

Against this backdrop, the Euro (EUR) remains supported by expectations of stable monetary policy in the Eurozone and by a global environment increasingly tilting future rate differentials in favor of the EUR.

Market attention will continue to focus on upcoming remarks from European Central Bank (ECB) policymakers, although the US macroeconomic cycle remains the key driver for the pair.

EUR/USD therefore remains firmly biased to the upside as long as investors anticipate faster monetary easing in the United States (US) than in the Eurozone, potentially opening the door to further gains should US data continue to soften.

EUR/USD Technical Analysis

In the 4-hour chart, EUR/USD trades at 1.1558. The 100-period Simple Moving Average (SMA) edges lower near 1.1554, keeping broader pressure in place, while price has reclaimed the SMA and attempts to stabilize above it. A sustained hold over the average would firm the near-term tone. The Relative Strength Index (RSI) rises to 58, indicating improving upside momentum after a sharp rebound from sub-30 readings.

The descending trend line from 1.1817 caps the upside, with resistance at 1.1622, followed by 1.1820. On the downside, the break of the earlier descending line from 1.1654 at 1.1533 establishes initial support, ahead of 1.1500. A 4-hour close above the trend-line barrier would extend the recovery toward the next resistance, while loss of the newly formed floor would bring the next support into view.

(The technical analysis of this story was written with the help of an AI tool)