- The ECB cut interest rates by 25 basis points on Thursday, following a similar move at its September meeting.
- The Eurozone economy performed poorly compared to the US.
- The data revealed that US retail sales jumped 0.4% in September.
The EUR/USD outlook shows increased downward pressure as bets on a European Central Bank rate cut rise after Thursday’s meeting. Meanwhile, the dollar held near an 11-week high against the euro on growing bets on a Trump victory and upbeat US data.
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The ECB cut interest rates by 25 basis points on Thursday, following a similar move at its September meeting. Although the move was fully priced in by markets, the result led to an increase in bets for future rate cuts. As a result, the euro collapsed.
The eurozone economy performed poorly compared to the US, putting pressure on the ECB to reduce borrowing costs. At the same time, inflation in the bloc was reduced to 1.8%, below the central bank’s target. Accordingly, traders expect another rate cut in December and more in 2025.
Meanwhile, the US dollar strengthened after an upbeat retail sales report. The data showed sales jumped 0.4% in September, beating estimates of 0.3%. At the same time, core retail sales rose 0.5% compared to forecasts of 0.1%. The upbeat numbers point to strong consumer spending and a healthy economy. Moreover, it eased bets on a November Fed rate cut, while increasing the likelihood of a pause.
Meanwhile, market participants are weighing in on a possible Trump victory in next month’s presidential election. The last time it won, the dollar strengthened as traders priced in higher inflation. Therefore, there is a chance that another win will boost the dollar.
EUR/USD key events today
Market participants do not expect key events today, so the pair could end the week calmly.
Technical outlook for EUR/USD: Bearish momentum renewed
From the technical side, EUR/USD the price is hovering near the 1.0801 support level after making a new low in the downtrend. The price is below the 30-SMA, with the RSI near the oversold region.
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Initially, the RSI made a bullish divergence, which failed to play out. This shows that the bears have regained their momentum. If they continue with the momentum, the pair will soon challenge the support level of 1.0801. However, he might take another look at the SMA before looking for new lows.
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