The EUR/USD pair posted slight losses on Friday, trading near 1.1560, after a quiet session around the 1.1540 support zone. The broader trend stays bearish, supported by a stronger US Dollar amid fading expectations of a Federal Reserve rate cut in December and subdued Eurozone inflation data.
Eurozone inflation data fails to inspire
The preliminary Eurozone Harmonized Index of Consumer Prices (HICP) confirmed that inflation eased to 2.1% year-on-year in October, down from 2.2% in September. Core inflation held steady at 2.4%, while monthly readings rose slightly—headline at 0.2% and core at 0.3%—reflecting minimal price momentum. The data offered little reassurance to investors seeking signs of renewed price growth.
US Dollar stays firm on Fed and trade optimism
The US Dollar continues to gain ground following the Fed’s so-called “hawkish cut” earlier this week, which tempered expectations for another rate reduction in December. Sentiment also improved after US President Donald Trump and China’s Xi Jinping agreed to sustain their trade truce, easing global trade tensions.
In contrast, the European Central Bank (ECB) kept its benchmark rate unchanged at 2%, as expected. President Christine Lagarde maintained that the ECB is “in a good place,” suggesting no immediate need for additional easing. Despite a brief uptick, the Euro’s upside remains limited.
Market movers: Dollar strength dominates
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The US Dollar Index (DXY) holds firm amid cautious risk sentiment, helped by solid Treasury yields and reduced rate-cut bets.
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Fed Chair Jerome Powell’s hawkish tone lifted the 10-year Treasury yield by over 30 basis points since Wednesday, touching 4.10%, a three-week high.
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The CME FedWatch Tool now shows only a 64.8% chance of a December rate cut, down sharply from 91% before the Fed meeting.
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On the European side, ECB officials including Kocher, Kazaks, and Muller echoed Lagarde’s optimism, but their remarks had little impact on the Euro.
Technical outlook: Bias remains bearish
Technically, EUR/USD has broken below its monthly triangle pattern, confirming a bearish continuation. The recovery attempt after the ECB decision stalled beneath former support at 1.1580, now acting as resistance.
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RSI (4H) remains low but above oversold territory, while MACD indicates strong downside momentum.
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Key supports: 1.1545 (October 9–14 lows), followed by 1.1500 and the triangle target near 1.1450.
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Resistance levels: 1.1580, then 1.1615 (descending trendline), 1.1635 (Thursday’s high), and 1.1670 (October 28–29 highs).
