- Data revealed moderate growth in US consumer spending for October.
- Investors await comments from Fed Chairman Jerome Powell later on Friday.
- The data revealed that inflation in the eurozone experienced a more significant decline than expected.
EUR/USD price analysis unfolds as the dollar falls, allowing the euro to rise slightly after absorbing significant overnight losses. Traders assessed data that revealed a drop in inflation in the eurozone. Accordingly, they are buzzing with expectations that interest rates may have reached their bottom.
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Meanwhile, the dollar index had its weakest monthly performance in a year in November despite rising 0.6% overnight. Data on Thursday showed moderate growth in US consumer spending for October and the smallest annual increase in inflation in 2-1/2 years.
The eagerly awaited PCE price index rose 3% in October from a year earlier. It slowed from a three-month streak of 3.4%. The rate is still above the Fed’s 2% target. However, it is a new low that could satisfy the Fed and reduce pressure for further hikes.
Investors will now shift their focus to Fed Chairman Jerome Powell’s comments later on Friday. Traders will scrutinize every word for insight into rate prospects. Carol Kong, currency strategist at the Commonwealth Bank of Australia, predicts Powell will reaffirm the possibility of further tightening. Moreover, it is likely to moderate rate cut expectations.
In Europe, data on Thursday revealed that inflation in the eurozone fell more significantly than expected for the third month in a row in November. As a result, there are expectations of a rate cut in the early spring. The data resulted in the euro falling 0.7 percent on Thursday.
EUR/USD key events today
- US ISM manufacturing PMI
- Fed Chairman Powell’s speech
EUR/USD Price Technical Analysis: Bears Take Control After Bearish RSI Divergence
A bearish RSI divergence on the 4-hour chart has played out, leading to a change in sentiment for EUR/USD. The bulls were no longer strong enough to continue the uptrend. As a result, bears appeared with larger candles, showing strong momentum. It was clear that the trend has reversed when the price broke below the support trend line and the 30-SMA.
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At the same time, the RSI fell below 50, confirming that the bears are stronger than the bulls. Currently, the price is heading towards the next support level at 1.0851. The final step for the bears to confirm the downtrend will be a series of lower lows and highs.
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