- EUR/USD falls 0.39%, weighed down by ECB remarks and anticipation of the FOMC meeting.
- ECB's potential policy shift hints prompt Euro decline in forex market.
- Focus shifts to Fed decision; thought recent US inflation and robust economic growth could set Powell’s and Co. decision.
The EUR/USD extends its losses on Monday, with buyers scrambling to keep the exchange rate above the 1.0800 figure amid a quiet trading session ahead of Wednesday's US Federal Open Market Committee (FOMC) decision. A drop in US Treasury yields is not an excuse for US Dollar (USD) bulls to propel the buck; therefore, the major trades at 1.0809, down 0.39%.
ECB officials open the door for rate cuts in next meeting
The Euro (EUR) is taking a toll on European Central Bank (ECB) policymakers' comments, with Peter Kazimir noting, “The next move will be a cut, and it is within our reach,” wrote in a blog post. Echoing his comments was ECB’s Mario Centeno added that he prefers to act sooner than later and be more “gradual’ when easing policy.
In the meantime, Klas Knot added, “We now have a credible prospect that inflation will return to 2% in 2025. The only piece that's missing is the conviction that wage growth will adapt to that lower inflation.”
Aside from this, the main spotlight lies in the US Federal Reserve’s (Fed) decision on Wednesday. It should be said that the Fed’s preferred gauge for inflation stood at 2.6% YoY last Friday, though underlying figures dipped from 3.2% to 2.9% YoY, which could open the door for the Fed to ease policy. Nevertheless, strong economic growth in the United States (US) could deter Fed Chair Jerome Powell and Co. from relaxing monetary conditions.
EUR/USD Price Analysis: Technical outlook
With the EUR/USD pair printing a new cycle low after breaching January’s 23 low of 1.0821, bears have the 100-day moving average (DMA) in sight at 1.0777. A breach below 1.0800 could put the latter in play. Once those key support levels are surpassed, the next stop would be the December 8 low of 1.0724. On the flip side, if bulls regain the 200-DMA at 1.0841, that could pave the way to challenge 1.0900.
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