- US gross domestic product increased by 5.2% on an annual basis in the last quarter.
- There is an increased likelihood of a Fed rate cut in March.
- German inflation data points to a slowdown to 2.3% in November.
Today’s EUR/USD forecast is bearish as the dollar recovers from three-month lows. The reversal comes after stronger-than-expected growth in the US economy in the third quarter.
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US gross domestic product increased at an annual rate of 5.2% in the latest quarter, beating the initially reported 4.9%. Moreover, this marked the fastest expansion since the fourth quarter of 2021. Economists had expected growth to be revised to 5.0%.
After the GDP data, futures showed an increased likelihood of a rate cut starting in March. There is an almost 50% chance of easing, compared to almost 35% late Tuesday.
The dollar strengthened against the euro. However, it should record its most significant monthly decline since November 2022. This is due to increasing expectations that the Federal Reserve will cut interest rates in the first half of 2024.
Markets are eagerly awaiting Fed Chairman Jerome Powell’s response to Fed Governor Christopher Waller’s comments on Tuesday. Waller hinted at a possible rate cut in the coming months. As a result, US bond yields and the dollar fell.
Meanwhile, the euro weakened against the dollar after German inflation data on Wednesday indicated a slowdown to 2.3% year-on-year in November from 3% in October. Similarly, inflation in Spain experienced a sharp slowdown.
EUR/USD key events today
- Eurozone CPI
- The core US PCE price index
- USA is waiting for the sale of the house
EUR/USD Technical Forecast: Resistance at 1.1000 prompts pullback
EUR/USD turned south, breaking the key support at 1.0950. The pair closed below the 20 and 50 period SMAs. The next stop for sellers lies at 1.0860, which was the previous rejection zone and the 100-period SMA.
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Alternatively, if the price bounces back above today’s high, we will assume a continuation of the downtrend after the corrective decline. However, the probability of a fall seems higher.
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