EUR/USD Forecast: Euro drops to the 100-day SMA, negative momentum persists

The US Dollar Index rose to two-week highs despite mixed US data.
The EUR/USD fell for the fifth consecutive day, to test the 100-day SMA.
Bearish bias will remain in place while under 1.0915.

Matías Salord FXStreet

The EUR/USD dropped again and extended the correction from above 1.1000, consolidating below the 20-day Simple Moving Average (SMA). This move was driven by a stronger US Dollar, which rose despite mixed US data and lower Treasury yields.

European Central Bank (ECB) Isabel Schnabel stated on Wednesday that inflation is falling more rapidly than expected, indicating that another rate hike is unlikely. Market participants share this view and are now anticipating a rate cut by the March meeting. Eurozone data revealed that the Producer Price Index (PPI) declined by 9.4% in October compared to the previous year, lower than the 12.4% recorded in September. The final release of the Eurozone (EZ) November Service PMIs showed an upward revision. A report from the ECB indicated that one-year inflation expectations remained stable at 4.0%. On Thursday, Eurozone retail sales data for October will be released.

The decline in EUR/USD was driven by a stronger US Dollar, despite the larger-than-expected decline in the JOLTs Job Openings, which suggests a more balanced labor market. The ISM Services PMI rose to 52.7 in November, surprising expectations. With inflation slowing down and a less tight labor market, the Federal Reserve (Fed) is perceived to have completed its tightening cycle. Market participants anticipate rate cuts in 2024, although this is not currently suggested by Fed officials. On Wednesday, the ADP Employment Report will be released.

EUR/USD short-term technical outlook

The EUR/USD found support at the 100-day SMA at 1.0775. The mentioned line is being challenged, and a daily close well below would indicate further weakness. The price is already below the 20 and 200-day SMAs. Technical indicators in the daily chart continue to favor the downside. Below 1.0770, the next critical support stands at 1.0690 (uptrend line, 55-day SMA).

In the 4-hour chart, the pair is moving with a bearish bias. Technical indicators are at oversold levels, suggesting some consolidation ahead before a potential leg lower. The strong negative momentum in the short term is likely to persist while below 1.0850. For a negative short bias to be reversed, the Euro must rise and stay above 1.0915.

View Live Chart for the EUR/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.