The U.S. dollar has strengthened for the fourth consecutive week, driven by reduced Federal Reserve rate cut expectations and market uncertainty.
Key Points
- EUR/USD shows mixed performance amid election and policy anticipation.
- Speculation around Trump’s return bolsters the dollar’s safe-haven status.
- Euro weakens on Eurozone economic concerns, especially in Germany.
EUR/USD Daily Price Analysis – 25/10/2024
The EUR/USD pair is showing mixed performance as market participants assess a range of influential factors, including upcoming elections in Japan and the United States, evolving sentiment on Federal Reserve rate policy, and business activity trends in Europe. The pair closed Thursday at 1.08279, up 0.42% from its opening at 1.07834, but today is showing a slight dip of -0.02%, trading at 1.08258 as of the latest update.
Dollar Strengthens on Reduced Rate Cut Expectations
The U.S. dollar continued its rally for the fourth consecutive week, driven by ongoing market uncertainty and expectations for a more measured pace of interest rate cuts from the Federal Reserve. As investors navigate a complex backdrop filled with political and economic events, the greenback’s safe-haven status has remained attractive, underpinning demand and pressuring the euro lower.
The dollar’s performance was further buoyed by market speculation regarding the potential return of Donald Trump to the U.S. presidency, contributing to its resilience amid global market uncertainties. The dollar index is currently steady at 104.01 after reaching a three-month high of 104.57 earlier in the week, pointing to a weekly gain of 0.5%. This ongoing strength suggests support for the dollar is coming not only from a potential shift in Federal Reserve policy but also from traders seeking a hedge against rising uncertainties.
Meanwhile, the euro has struggled to gain traction, trading at 1.08255, close to a three-month low. This weakness comes amid ongoing concerns about growth in Europe, particularly in the eurozone’s largest economy, Germany.
Recent surveys indicated that business activity in the eurozone stalled in October, although the contraction in Germany was less severe than previously seen. A separate survey of German business sentiment offered a glimmer of optimism, showing a better-than-expected improvement for the month, although confidence remains fragile after four consecutive months of declines.
Market Sentiment and Volatility Factors
Currency options volatility has also seen an uptick, reflecting traders’ need to hedge against numerous risks on the horizon. These include the upcoming elections in Japan and the U.S., major central bank rate decisions, and the first Labour budget in Britain in 14 years.
With investors facing such a condensed schedule of high-impact events, uncertainty is driving cautious sentiment across the board. As a result, the dollar has benefited from safe-haven flows, showing continued support for the dollar amid “slightly unstable” conditions.
The EUR/USD pair may remain under pressure as the euro lacks sufficient positive catalysts to reverse its recent downtrend. Sentiment toward the euro remains hampered by broader concerns about the economic trajectory in Europe, particularly as growth in Germany and other key economies struggles to gain momentum. This ongoing uncertainty is providing little incentive for a strong euro rebound, especially in the face of continued dollar strength.
Key Economic Data and News to Be Released Today
Today’s economic calendar is light, with no significant data releases anticipated that could directly influence EUR/USD. However, traders should remain cautious of any unforeseen events or statements from policymakers, particularly given the unpredictable global landscape currently dominated by political and economic shifts.
EUR/USD Technical Analysis – 25/10/2024
The technical analysis outlook on EUR/USD today is quite messy. While the overall direction is showing a strong hint at a bullish reversal, we may see the price selling a little towards the 200 EMA before today’s buy starts kicking in.
Overall, the RSI is ranging in between the level 50, giving us no clear direction. However, should the price retest the 200 EMA or even break above the current resistance zone, we may see a strong move to the upside before the end of the day. Otherwise, price may continue ranging for the rest of the day.
EUR/USD Fibonacci Key Price Levels 25/10/2024
Short-term traders planning to invest in EUR/USD today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 1.07867 | 1.08321 |
| 1.07726 | 1.08462 |
| 1.07499 | 1.08689 |
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