EUR/USD forecast: renewed USD strength pressures Euro toward 1.0500
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EUR/USD begins the week under selling pressure, retreating toward the key psychological level of 1.0500 as US Dollar strength dominates. Concerns over US trade policies under President-elect Donald Trump and a cautious risk environment weigh on the pair. Traders await ISM Manufacturing PMI data from the US later in the session for fresh directional cues.
Key Drivers: USD Strength and Risk Aversion
The US Dollar strengthens broadly at the start of the week, supported by renewed risk aversion and hawkish expectations for Federal Reserve policy. Over the weekend, President-elect Donald Trump reaffirmed his commitment to safeguarding the USD’s status as the global reserve currency. His comments about imposing 100% tariffs on BRICS nations if they attempt to establish a rival currency have further reinforced the Greenback’s appeal. Additionally, US equity futures signal a cautious market tone, with major indices trading in the red during the European morning. This backdrop, coupled with higher US Treasury yields, provides additional support for the USD. The EUR, meanwhile, struggles to sustain last week’s recovery amid heightened geopolitical risks and muted investor sentiment.
US ISM Manufacturing PMI in Focus
Later today, the ISM Manufacturing PMI for November will take center stage. The index is forecast to improve to 47.5 from October’s 46.5, though still below the 50 threshold that separates contraction from expansion. A better-than-expected PMI reading could fuel further USD gains, pressuring EUR/USD toward deeper lows. Conversely, a weaker print may temporarily cap the USD rally, though the pair's recovery potential will likely remain constrained unless broader risk sentiment improves.
Technical Analysis: Bearish Momentum Intact
EUR/USD’s technical outlook confirms a bearish bias in the short term.
RSI (4-hour): The Relative Strength Index has dipped below the neutral 50 level, signaling growing downward momentum.
100-Period SMA (4-hour): The pair failed to sustain gains above the 100-period SMA and has since closed below it, highlighting a lack of bullish conviction.
Support Levels:
1.0500: Psychological and static support zone. A break below this level opens the door to further losses toward
1.0440: A key static level.
1.0400: Major round number support and a potential target for extended bearish moves.
Resistance Levels:
1.0550: Immediate resistance aligned with the 100-period SMA.
1.0610: Static resistance zone from recent highs.
1.0660: A strong barrier for any sustained recovery attempts.
Market Outlook
The short-term bias for EUR/USD remains tilted to the downside, with the pair likely to test and potentially breach the 1.0500 level if USD strength persists. While ISM data could influence intraday volatility, the broader trend will hinge on risk sentiment and geopolitical developments, particularly regarding US trade policies.
Unless the Euro finds support from improving sentiment or dovish developments in US data, its recovery will likely face stiff resistance near 1.0550, keeping the bearish trajectory intact.
Key Drivers: USD Strength and Risk Aversion
The US Dollar strengthens broadly at the start of the week, supported by renewed risk aversion and hawkish expectations for Federal Reserve policy. Over the weekend, President-elect Donald Trump reaffirmed his commitment to safeguarding the USD’s status as the global reserve currency. His comments about imposing 100% tariffs on BRICS nations if they attempt to establish a rival currency have further reinforced the Greenback’s appeal. Additionally, US equity futures signal a cautious market tone, with major indices trading in the red during the European morning. This backdrop, coupled with higher US Treasury yields, provides additional support for the USD. The EUR, meanwhile, struggles to sustain last week’s recovery amid heightened geopolitical risks and muted investor sentiment.
US ISM Manufacturing PMI in Focus
Later today, the ISM Manufacturing PMI for November will take center stage. The index is forecast to improve to 47.5 from October’s 46.5, though still below the 50 threshold that separates contraction from expansion. A better-than-expected PMI reading could fuel further USD gains, pressuring EUR/USD toward deeper lows. Conversely, a weaker print may temporarily cap the USD rally, though the pair's recovery potential will likely remain constrained unless broader risk sentiment improves.
Technical Analysis: Bearish Momentum Intact
EUR/USD’s technical outlook confirms a bearish bias in the short term.
RSI (4-hour): The Relative Strength Index has dipped below the neutral 50 level, signaling growing downward momentum.
100-Period SMA (4-hour): The pair failed to sustain gains above the 100-period SMA and has since closed below it, highlighting a lack of bullish conviction.
Support Levels:
1.0500: Psychological and static support zone. A break below this level opens the door to further losses toward
1.0440: A key static level.
1.0400: Major round number support and a potential target for extended bearish moves.
Resistance Levels:
1.0550: Immediate resistance aligned with the 100-period SMA.
1.0610: Static resistance zone from recent highs.
1.0660: A strong barrier for any sustained recovery attempts.
Market Outlook
The short-term bias for EUR/USD remains tilted to the downside, with the pair likely to test and potentially breach the 1.0500 level if USD strength persists. While ISM data could influence intraday volatility, the broader trend will hinge on risk sentiment and geopolitical developments, particularly regarding US trade policies.
Unless the Euro finds support from improving sentiment or dovish developments in US data, its recovery will likely face stiff resistance near 1.0550, keeping the bearish trajectory intact.