- Market participants expect the ECB to cut interest rates.
- The dollar rose on increasing bets on a Trump victory.
- Traders await the US retail sales report for more clues on the Fed’s future moves.
The EUR/USD forecast points to the south as the euro is under pressure ahead of an expected rate cut by the European Central Bank. Meanwhile, the greenback was on the front foot due to the increasing likelihood of a Trump victory.
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The ECB will meet on Thursday, and market participants expect the central bank to cut interest rates. The Eurozone economy slowed, and inflation fell below the 2 percent target. Moreover, policymakers are currently more focused on preserving growth.
Christine Lagarde recently hinted at the likelihood of a rate cut at the next policy meeting. Lower borrowing costs weigh on the euro, especially as Fed policymakers become more cautious. Notably, the dollar recovered thanks to a resilient economy and higher-than-expected inflation. Upbeat economic figures have led to cautious remarks, with some policymakers expecting only one rate cut before the end of the year.
Meanwhile, market participants are also weighing in on a likely Trump victory, supporting the dollar. If Trump wins, his fiscal policy measures could lead to high inflation, challenging the Fed’s mandate.
Meanwhile, traders await the US retail sales report for more clues on the Fed’s future moves. Economists expect a jump in sales of 0.3 percent. A bigger-than-expected jump would reduce the chances of a November Fed rate cut. Moreover, the trend of strong economic demand would continue. On the other hand, weak sales would signal weaker consumer spending, which would increase expectations of a rate cut.
EUR/USD key events today
- The main refinancing rate of the Eurozone
- Statement on Eurozone Monetary Policy
- US Core Retail m/m
- USA retail m/m
- US unemployment claims
EUR/USD Technical Forecast: Downtrend continues but momentum fades
On the technical side, the EUR/USD price made new lows after breaking below the 1.0900 support level. Furthermore, the price has fallen well below the 30-SMA, showing bears in the lead. However, the RSI is climbing as the price drops to new lows, indicating a bullish divergence.
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Consequently, the bearish momentum is fading and could allow the bulls to resurface. A bounce would trigger the 30-SMA and the 1.0900 level. A break above would signal a reversal, allowing bulls to target the 1.1000 resistance level.
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