The Euro (EUR) continued to trade lower amid political uncertainties in Germany. The minority government faces economic and diplomatic challenges. The EUR was last seen at 1.0612 levels, note OCBC FX analysts Frances Cheung and Christopher Wong.
Daily momentum is bearish
“Prime Minister Scholz is seeking an earlier vote of confidence, on December 16 instead of January 15, but is expected to lose. Early elections will probably be planned for February 23. Elsewhere, the “EUR will bear the brunt of the US election outcome. Trump’s presidency will result in changes to US foreign and trade policies.”
“The possible 20% tariff (if implemented) may hurt Europe, where growth is already slowing, and the US is the EU’s main export destination. Yield differentials between the EU and the US .US have already widened and may widen further as markets speculate on a dovish ECB, with rumors of a 50bp cut at the December meeting.”
“Daily momentum is bearish as RSI fell. Support at 1.06 levels (2024 low). A break below this support will open the way for further declines towards 1.0450/1.05 levels. Resistance at 1.0740 (76.4% fibo), 1.0810/30 levels (21 DMA, 61.8% Fib retracement from low to high in 2024).”
Source: Fx Street
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