EUR/USD Pair Shows Weakness Amid Rate Speculations

The EUR/USD pair has been trading with a downward trend for a second consecutive day on Monday. This follows a slight uptick in the US dollar (USD), influenced by the diminishing chances of further interest rate reductions by the US Federal Reserve. The pair has moved away from the two-week high it reached last Thursday, and bearish traders are anticipating a solid break below the 1.1600 level to capitalize on potential further declines.

From a technical standpoint, last week’s struggle and ensuing drop near the crucial resistance of the 50-day simple moving average (SMA) suggests the bears are currently in control. Nonetheless, the neutral signal from the daily chart’s oscillator indicates a need for caution. Many believe that the European Central Bank (ECB) will maintain deposit rates until late next year, which may lend some support to euro (EUR) bulls.

This potential decline could entice some buyers, with a likely support area around 1.1575-1.1570. However, if there’s a significant breakout, it could trigger a technical sell-off, placing the EUR/USD at risk of hitting the psychological threshold of 1.1500. It’s conceivable that prices might drop to the 1.1470-1.1465 range, reaching levels not seen since early August.

Conversely, the 50-day SMA, currently positioned around the 1.1660-1.1665 zone, is expected to continue providing substantial resistance. If the EUR/USD pair manages to surpass this level, it might reclaim the 1.1700 mark. Any sustained buying beyond the 1.1725-1.1730 range could pave the way for further movements toward 1.1755-1.1760 and eventually to the 1.1800 level and the 1.1815-1.1820 resistance zone.

EUR/USD Daily Chart

This article has been updated to correct an earlier error—initially stating that the EUR/USD was attracting sellers for the second day in a row on Monday, instead of on Friday.