The EUR/USD pair is holding steady, climbing for the sixth consecutive day on Monday and trading just below a two-week peak of 1.1620. Even though the Eurozone’s Purchasing Managers’ Index (PMI) was revised downward for November, it didn’t significantly shake the euro, which is benefiting from a weaker US dollar.
The US dollar is under pressure as investors gear up for an anticipated rate cut by the Federal Reserve next week. Additionally, reports suggest that President Trump could name economic advisor Kevin Hassett as the next chairman of the central bank. Hassett is known for his dovish stance and is likely to promote a more lenient monetary policy.
This afternoon, Federal Reserve Chairman Jerome Powell is set to take part in a panel discussion at Stanford, California. However, the major focus will be on the upcoming release of the November ISM Manufacturing PMI, which is expected at 3pm Japan time.
The euro continues its upward trend, despite challenging manufacturing data in the euro area
- The final HCOB manufacturing PMI for the euro area indicates contraction in the sector for November, with a reading of 49.6. This is slightly higher than the initial estimate of 49.7, but lower than October’s figure of 50.0.
- Despite the weaker PMI, the euro is still gaining ground, primarily due to the declining US dollar. There’s a growing expectation that the Federal Reserve will lower its benchmark interest rate by 25 basis points next week, which is drawing investors away from the dollar.
- Chairman Powell is attending a commemorative lecture with George P. Shultz, but he’s not likely to discuss monetary policy, given the Fed’s current blackout period leading up to the December meeting.
- Attention is set to shift towards the US ISM PMI for November, which is anticipated to fall to 48.6 from 48.7 in October. Meanwhile, the price paid sub-index is expected to rise to 59.6, up from 50.0 in October. Employment indicators will also be closely monitored.
- This week is filled with significant economic data, including the Eurozone Harmonized Consumer Price Index (HICP) due out on Tuesday, followed by the Eurozone and US Services PMI and the ADP Employment Change Report on Wednesday, and wrapping up with the US Personal Consumption Expenditures (PCE) Price Index on Friday.
Technical analysis: EUR/USD breaches the 1.1615 resistance level
Weakness in the USD is allowing EUR/USD bulls to push against the upper bounds of a descending channel from early October, targeting the 1.1615 area. Technical indicators present a mixed picture. The 4-hour Relative Strength Index (RSI) remains positive, hovering around 60.0, while the Moving Average Convergence Divergence (MACD) is near the signal line, suggesting a loss of bullish momentum.
A sustained breakout above 1.1615 would signal a potential trend reversal, drawing attention to the 1.1660-1.1670 range—alongside highs from late October and mid-November. If that level is surpassed, the next significant target would be the high from October 17, just shy of 1.1730.
As of now, support is positioned at 1.1550, around the highs observed on November 21 and 24. A further downturn could test the psychological threshold of 1.1500, close to the November 5 low of around 1.1470.
