. Market Update: EUR/USD Rebounds on ECB's Policy Shift

Market Update: EUR/USD Rebounds on ECB’s Policy Shift

08 Dec 2023

Forex Market Focus: EUR/USD Rebounds as ECB Hints at Rate Hike Pause; USD Weakens.

The EUR/USD currency pair managed a modest rebound today, halting its six-day downward trend amid a broader sell-off of the US dollar and increased buying interest in the Japanese yen. Despite reaching a multi-week low since November 14, finding support in the mid-1.0700s contributed to the rebound. This recovery occurred despite expectations that weaker equity markets might limit the US dollar’s losses, capping gains for the euro.

The focus on a potential shift in the European Central Bank’s (ECB) monetary policy influenced the euro’s movement. Comments from ECB Executive Board member Isabel Schnabel hinted at the possibility of the central bank pausing its rate hikes due to declining inflation rates. This dovish tone has sparked speculation about a significant ECB rate cut, with predictions totaling 142 basis points in 2024.

In addition to the ECB’s stance, German industrial production in October fell more than expected by 0.4% signaling potential economic headwinds for the eurozone. Traders are now eyeing upcoming US employment data, including Jobless Claims and the Nonfarm Payrolls (NFP) report on Friday, for further cues on currency movements.

Technical Overview for EUR/USD:

Moving Averages:

  • Exponential:
  • MA 10: 1.08 (Negative Crossover – Bearish)
  • MA 20: 1.08 (Negative Crossover – Bearish)
  • MA 50: 1.08 (Positive Crossover – Bullish)
  • Simple:
  • MA 10: 1.09 (Negative Crossover – Bearish)
  • MA 20: 1.09 (Negative Crossover – Bearish)
  • MA 50: 1.07 (Positive Crossover – Bullish)

RSI (Relative Strength Index): 47.38 (Neutral Zone – Neutral)

Stochastic Oscillator: 9.62 (Buy Zone)

Resistance and Support Levels:

  • R1: 1.10
  • R2: 1.11
  • S1: 1.06
  • S2: 1.05

Overall Sentiment: Neutral Market Direction: Sell

Trade Suggestion:

  • Limit Sell: 1.07557
  • Take Profit: 1.05620
  • Stop Loss: 1.08444