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EUR/USD maintains modest recovery around 1.0780 amid USD weakness

  • EUR/USD records a modest recovery from the multi-week low reached this Thursday.
  • Expectations of a Fed rate cut and the strong rebound in demand for the Yen caused profit taking in the Dollar.
  • A softer risk tone should halt USD losses and cap the pair amid dovish ECB rhetoric.

The EUR/USD pair is attracting some buyers near the 1.0750 region, its lowest level since November 14 touched earlier this Thursday and, for now, appears to have broken a six-day losing streak. The pair is holding on to modest intraday gains around the 1.0780 region during the European session amid a weaker US Dollar (USD), although it lacks bullish conviction.

The dollar’s decline from two-week highs reached on Wednesday could be attributed to profit-taking on dovish expectations from the Federal Reserve (Fed). On the other hand, the strong rebound in demand for Japanese Yen (JPY) is another factor that weighs on the Dollar. That being said, an overall weaker tone around the stock markets should help limit the safe-haven Dollar’s losses and cap any significant upside move in the EUR/USD pair.

On the other hand, the moderate rhetoric of the authorities of the European Central Bank (ECB) could curb bullish expectations regarding the common currency. ECB board member Isabel Schnabel said Tuesday that the central bank may rule out further rate hikes given the notable drop in inflation and rising rate cut expectations. In fact, markets are pricing in the possibility of a cumulative 142 basis point rate cut in 2024, which should cap the EUR/USD pair.

In economic data, German industrial production – the Eurozone’s economic engine – fell 0.4% in October, compared to estimates of a 0.2% drop and -1.3% the previous month. Market participants are now looking to the release of weekly US initial jobless claims data to gain some momentum during the early part of the American session, although attention will remain focused on Friday’s NFP report. Meanwhile, the aforementioned mixed fundamental background makes it prudent to wait for strong follow-through buying before confirming that the recent sharp pullback from the 1.1015 area, or three-month highs touched in November, is over.

Technical levels to monitor

EUR/USD

Overview
Latest price today 1.0778
Today I change daily 0.0016
Today’s daily variation 0.15
Today’s daily opening 1.0762
Trends
daily SMA20 1,086
daily SMA50 1.0696
SMA100 daily 1.0771
SMA200 daily 1.0821
Levels
Previous daily high 1.0805
Previous daily low 1.0759
Previous weekly high 1.1017
Previous weekly low 1.0829
Previous Monthly High 1.1017
Previous monthly low 1.0517
Daily Fibonacci 38.2 1.0776
Fibonacci 61.8% daily 1.0787
Daily Pivot Point S1 1.0746
Daily Pivot Point S2 1.0729
Daily Pivot Point S3 1.07
Daily Pivot Point R1 1.0792
Daily Pivot Point R2 1.0821
Daily Pivot Point R3 1.0838

Source: Fx Street

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