EUR/USD Hits Multi-Month Lows Amid U.S. Dollar Surge and Election Impact

EUR/USD

Prediction: Decrease

Fundamental Analysis:
  
EUR/USD declined sharply midweek, dropping over 1.75% and slipping below 1.0750, a level not seen since July. The U.S. Dollar gained strength as the market reacted to former President Donald Trump emerging as the leading candidate in the presidential election.

Wednesday’s trading saw significant selling pressure on EUR/USD, which reached new multi-month lows near 1.0685-1.0680, as investors considered the implications of a potential “Red Sweep.” The pair also dropped convincingly under the 200-day moving average at 1.0870, suggesting the possibility of further declines.  

Meanwhile, the U.S. Dollar Index surged past 105.00, buoyed by rising U.S. yields and a decrease in German bund yields. The Federal Reserve is anticipated to announce a 25-basis-point rate cut on Thursday, contrasting with the European Central Bank’s cautious stance after lowering its deposit rate to 3.25%. Trump’s win could lead to new tariffs on European and Chinese imports, potentially driving up inflation and influencing the Fed’s approach to rate cuts. The relative strength of the U.S. economy over the eurozone suggests that Dollar strength may persist in the near term.

Technical Analysis:

EUR/USD could face additional losses, with a potential drop toward the November low of 1.082 and then the June low at 1.0666. To the upside, resistance lies at the November high of 1.0925, followed by the 55-day SMA at 1.1000 and the 2024 peak of 1.1214. As long as EUR/USD remains below the 200-day SMA at 1.0869, weakness is expected to continue. The four-hour chart shows renewed selling pressure, with initial support at 1.0682, followed by 1.0666 and 1.0649. The RSI is around 31, signaling oversold conditions.

 

 

 

 

 

 

 

 

 

 

 

Disclaimer

Derivative investments involve significant risks and may result in the loss of the capital you invest. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

RISK WARNING IN TRADING

Transactions via margin involve products that use leverage mechanisms, carry high risks, and are certainly not suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be wary of those who guarantee profits in trading. You are advised not to use funds if you are not prepared to incur losses. Before deciding to trade, ensure that you understand the risks involved and also consider your experience.