EUR/USD: Consolidate lower – OCBC

The Euro (EUR) continued to trade near recent lows amid political uncertainties in Europe. Pair was last at 1.0522 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum turns flat

“No-confidence vote may come as early as Wed after PM Barnier used rare constitutional powers to force a social security bill through. On Germany, far-right AfD is calling for Germany to leave the European Union, the EUR and Paris climate deal as the party prepares for early elections likely on 23 Feb-2025 (there is an explicit language here to quit EU unlike its manifesto ahead of the European parliament elections).”

“Bear in mind that Chancellor Scholz is expected to call for a vote of confidence on 11 Dec and the Bundestag will vote on 16 Dec. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. Political uncertainties in Germany and France may re-assert on EUR in the interim.”

“Daily momentum turned flat while RSI fell. Risks somewhat skewed to the downside. Support at 1.0450 levels before 1.0330. Resistance at 1.0610 (21 DMA), 1.0670 (38.2% fibo retracement of Oct high to Nov low). Week remaining brings services PMI, PPI (Wed); retail sales (Thu); 3Q GDP, employment (Fri).”