EUR/USD slips back from 1.1040 as markets pare back Greenback shorts

EUR/USD hits 18-week high on Friday.
Pre-holiday markets are producing some rough chop heading towards the Friday close.
Slowing US inflation is pushing down the Greenback as markets bet on rate cuts.

Joshua Gibson FXStreet

The EUR/USD climbed into an 18-week high at 1.1040 before slipping back towards 1.1000 as markets wind up operations before heading into the holiday break. US inflation missed the mark on Friday, printing below expectations and keeping investor expectations of Federal Reserve (Fed) rate cuts accelerating in 2024.

US Personal Consumption Expenditure (PCE) Price Index softened more than expected on Friday with the Core Annualized PCE Price Index for the year through November printing at 3.2%, below the forecast 3.3% and even further back from October’s YoY print of 3.4% (revised down slightly from 3.5%).

Money markets are ramping up their expectations of a faster pace of rate cuts from the Federal Reserve (Fed) through 2024 on the back of inflation metrics that continue to decline faster than most models can predict. Investor expectations have now run far ahead of the Fed’s own rate expectations looking forward, with money markets pricing in upwards of 160 basis points in Fed rate cuts, with some betting the rate cut cycle begins as soon as next March, while the Fed’s dot plot of interest rate expectations only sees 75 basis points in reductions by the end of 2024.

The market’s USD-short momentum was limited by a beat in US Durable Goods Orders, which printed at 5.4% for November versus October’s -5.1% (revised up slightly from -5.4%), showing the US economy may still be firm enough that the Fed might get away with fewer rate cuts than many expect.

EUR/USD Technical Outlook

Despite the US Dollar’s moderate pullback late Friday, the Greenback remains firmly down on the week, in the red by nearly a third of a percent against the Euro from Monday’s opening bids.

The US Dollar is still up on the day against the Euro, and a green close here will see the EUR/USD close in the green for seven of the last nine straight trading week.

Technicals are leaning into the bullish side, leaving a wake of technical support flags in the pair’s wake on its rise from October’s early lows near 1.0450. The last meaningful swing low saw a turnaround point at 1.9793, and the 200-day Simple Moving Average (SMA) rising towards 1.0850.

EUR/USD Hourly Chart

EUR/USD Daily Chart

EUR/USD Technical Levels

EUR/USD

Overview
Today last price	1.1018
Today Daily Change	0.0015
Today Daily Change %	0.14
Today daily open	1.1003

Trends
Daily SMA20	1.0887
Daily SMA50	1.0769
Daily SMA100	1.0755
Daily SMA200	1.0836

Levels
Previous Daily High	1.1003
Previous Daily Low	1.093
Previous Weekly High	1.1009
Previous Weekly Low	1.0742
Previous Monthly High	1.1017
Previous Monthly Low	1.0517
Daily Fibonacci 38.2%	1.0975
Daily Fibonacci 61.8%	1.0958
Daily Pivot Point S1	1.0954
Daily Pivot Point S2	1.0905
Daily Pivot Point S3	1.0881
Daily Pivot Point R1	1.1027
Daily Pivot Point R2	1.1052
Daily Pivot Point R3	1.1101

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold: Fed’s rate decision to drive the next move

Gold reflects a subdued performance at the start of the Federal Reserve’s (Fed) monetary policy week at around $4,330. Fed’s interest rate expectations heavily influenced last week after the release of the hot United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) reports for August.

Bitcoin consolidates, Ethereum faces hurdle, XRP nears key support

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) start the week near crucial technical levels after a broadly bearish performance, correcting over 4%, 1.5% and 5% last week. BTC consolidates around $77,600, while ETH approaches key $2,550 resistance. Meanwhile, XRP trades near its key level around $1.354, making this support level crucial for its near-term outlook.

US Dollar Weekly Forecast: The last line of defense

There was no respite to the downward trend for the US Dollar this week, which added to the prior week’s retracement and at some point flirted with the area of four-month lows. Indeed, after trading at levels just shy of its psychological 100.00 barrier early in the month, the US Dollar Index has come all the way down to challenge the 98.50 zone, extending its negative streak for the third month in a row.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.