- The euro fell on Wednesday after reports that Ukraine had fired a missile at Russia.
- Traders fear Trump’s looming tariffs on Eurozone goods.
- Economists expect the Fed to cut borrowing costs in December.
The EUR/USD forecast shows a fragile euro as investors worry about the escalation of the Ukraine war and looming Trump tariffs. Meanwhile, the dollar paused its gains as traders took profits following the Trump trade.
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The euro fell on Wednesday after reports that Ukraine had fired a missile at Russia. The conflict between Russia and Ukraine has escalated in recent days, Putin has threatened to use nuclear energy. Consequently, there is an increasing risk that the war will damage the Eurozone economy.
At the same time, traders fear Trump’s looming tariffs on eurozone goods, which could weaken the economy. Trump has promised to impose taxes on European cars, reducing demand. This looming threat to eurozone exports has clouded the outlook for the euro.
Elsewhere, the dollar paused its Trump rally as markets awaited further post-election developments. Currently, the president-elect is forming his cabinet, which has put a pause on political speculation. The dollar rose to a one-year high against the euro amid optimism that Trump’s presidency will bring strong economic growth and higher inflation. As a result, markets gradually reduced expectations for a Fed rate cut.
A Reuters poll showed economists expect the Fed to cut borrowing costs in December. However, market participants lowered bets to just under 60%. Meanwhile, the outlook for 2025 has also changed, with experts predicting fewer rate cuts.
Traders will now look to economic reports to gauge whether the Fed will taper in December. At the same time, remarks by policymakers can provide better insight into future policy moves.
EUR/USD key events today
Technical Forecast EUR/USD: The downtrend continues after a short break
From the technical side, EUR/USD the price has fallen back below the 30-SMA after pausing its decline recently. The downtrend stopped near the key 1.0501 level before the bulls took control and broke above the SMA. However, despite two attempts, they failed to break the key level of 1.0600.
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As a result, the bears re-emerged and broke below the SMA. The price has now retested the SMA as resistance and is bouncing lower to challenge the 1.0501 support level. A break below this support will signal a continuation of the previous downtrend.
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