- The ECB’s Isabelle Schnabel said on Wednesday that the central bank should cut rates gradually.
- Market participants await the German inflation report.
- Inflation in the US increased by 0.3%.
The EUR/USD outlook shows a slight dip after a sharp bullish turn after hawkish remarks from the European Central Bank boosted the euro. However, trade remained weak as the US celebrated the Thanksgiving holiday.
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The ECB’s Isabelle Schnabel said on Wednesday that the central bank should cut rates gradually rather than aggressively. According to her, reducing the cost of borrowing to stimulate economic growth will not solve the deep structural issues of the Eurozone. Moreover, Isabelle added that she does not see a recession in the future, which gives the central bank enough room to keep rates at restrictive levels.
Meanwhile, market participants await the German inflation report, which will provide more clues about the ECB’s rate cut. Markets expect policymakers to cut rates in the next few meetings to support the fragile economy.
On the other hand, the dollar remained weak after economic data in the previous session strengthened bets for a December Fed rate cut. The PCE core inflation report found that inflation rose 0.3%, which met forecasts. Meanwhile, the US economy grew by an expected 2.8%. A separate report showed that initial jobless claims fell slightly from 215,000 to 213,000.
The dollar initially strengthened after Trump promised to impose tariffs on China, Canada and Mexico. Market participants are eagerly awaiting Trump’s new administration, which will take office in January. Upcoming policy changes threaten to alter the outlook for economic growth, inflation and monetary policy. While these changes are likely to support the dollar, they could hurt the eurozone economy and the euro.
EUR/USD key events today
EUR/USD Technical Outlook: Bulls are taking control above the key 1.0500 level
From the technical side, EUR/USD the price broke above the key 1.0500 level and the 30-SMA, indicating a bullish reversal. At the same time, the RSI is now trading above 50, indicating strong bullish momentum.
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After consolidating below the SMA, the price finally broke above with strong candles. However, it is currently pulling back to retest the 30-SMA and the 1.0500 level as support. If the bulls stay ahead, the price will jump higher and target the resistance level of 1.0700. Otherwise, it will break below the SMA to target the 1.0301 support level.
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