The Euro continued its downward trend against the US Dollar on Friday, despite a temporary recovery. The market remains bearish due to expectations of further interest rate cuts by the European Central Bank (ECB).
The ECB recently reduced its key interest rate by 25 basis points, marking the third rate cut this year. While ECB President Christine Lagarde did not provide specific guidance for future rate cuts, traders are pricing in another 25 basis point reduction in December.
Key Factors:
- ECB Rate Cuts: Continued expectations for ECB rate cuts are weighing on the Euro.
- US Dollar Strength: The US Dollar’s strength, driven by recent economic data and expectations for a less aggressive Federal Reserve, is also putting pressure on the Euro.
- Trade Uncertainty: Concerns about potential trade obstacles due to the US presidential election are adding to the Euro’s weakness.
Technical Analysis:
- The EUR/USD pair is currently trading above the immediate support level of 1.0800.
- The 200-day Exponential Moving Average (EMA) and the psychological level of 1.1000 are key resistance levels.
- The Relative Strength Index (RSI) is in oversold conditions, suggesting potential for a short-term rebound.