The EUR/USD pair traded lower on Friday, influenced by geopolitical tensions in the Middle East, a weaker Eurozone economic outlook, and a stronger US Dollar.
Key Factors:
- Geopolitical Risks: Escalating tensions between Israel and Iran increased safe-haven demand for the US Dollar.
- Eurozone Economic Outlook: The European Central Bank (ECB) is expected to cut interest rates further, supported by weaker-than-expected Eurozone inflation data and growing concerns about economic growth.
- US Dollar Strength: The US Dollar gained ground as investors reduced expectations for aggressive interest rate cuts by the Federal Reserve (Fed), supported by stronger-than-expected US economic data.
Technical Analysis:
- Downward Trend: The EUR/USD pair is facing downward pressure, with a potential break below the 1.1000 support level.
- Moving Averages: The 50-day EMA is at 1.1043, providing potential support. A break below this level could confirm a downtrend.
- RSI: The Relative Strength Index (RSI) has declined, indicating a weakening of momentum.
Overall Outlook:
The EUR/USD pair is likely to remain under pressure due to the combination of geopolitical risks, a weaker Eurozone economy, and a stronger US Dollar. Traders should monitor technical indicators for signs of a trend reversal.