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EUR/USD bounces back as US Dollar gives up gains

26 Nov 2024


  • EUR/USD rebounds and returns to near 1.0500 as the US Dollar resumes its corrective trend triggered after Trump nominated Bessent for US Treasury Secretary.
  • ECB policymakers support reducing interest rates gradually to abate risks of inflation becoming persistent.
  • This week, investors will focus on US PCE inflation for October and Eurozone flash HICP data for November.
  • EUR/USD has regained its intraday losses and is approaching the significant resistance level of 1.0500 during the European session on Tuesday. The major currency pair has rebounded following a sluggish start, as the US Dollar (USD) relinquishes a substantial portion of its daily gains.

    The US Dollar Index (DXY), which measures the value of the Greenback against six key currencies, began on a strong note, climbing to approximately 107.50 in the early Asian session. However, it has since given up most of its gains, declining to around 107.00 during the European trading hours.
  • Renewed concerns have enhanced the attractiveness of the US Dollar (USD) during Tuesday's Asian trading session, following President-elect Donald Trump's warning of potential tariff increases on other North American economies, which he believes are complicit in the influx of illegal drugs from China into the United States. Trump indicated that he would impose a 25% tariff on both Mexico and Canada, in addition to a 10% tariff on China, supplementing the 60% rate previously mentioned during his campaign.

    The US Dollar is continuing its corrective movement that began on Monday, after Trump appointed experienced hedge fund manager Scott Bessent as Treasury Secretary. The USD experienced a significant decline as investors speculated that Bessent would adhere to an economic strategy focused on fiscal discipline and political stability.

    Looking ahead, market participants will be attentive to the Federal Open Market Committee (FOMC) Minutes from the monetary policy meeting held on November 7, scheduled for release at 19:00 GMT. During this meeting, the Federal Reserve lowered its key borrowing rates by 25 basis points (bps), bringing them to a range of 4.50%-4.75%.

    Additionally, this week, investors will be monitoring the US Personal Consumption Expenditure Price Index (PCE) data for October, set to be published on Wednesday. This inflation data is expected to shape market expectations regarding the Federal Reserve's interest rate decisions in December. According to the CME FedWatch tool, traders are split on whether the Fed will implement a 25 bps rate cut or maintain the current rates next month.

    Daily market update: EUR/USD rebounds despite several challenges  
    The EUR/USD pair has managed to recover from intraday losses on Tuesday. However, investors anticipate that the major currency pair will continue to face difficulties, as European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel expressed concerns regarding economic weakness in Germany, the largest economy in the Eurozone, during his remarks on Monday, as reported by Reuters.

  • Technical Analysis: EUR/USD holds key support of 1.0330

  • EUR/USD regains strength and bounces back to near 1.0500 in Tuesday’s European session. The major currency pair continues to hold the near-term low of 1.0330. However, the  remains bearish as all short-to-long-term Exponential Moving Averages (EMAs) in the daily chart are declining, pointing to a downside trend.

    The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold. However, the oscillator has cooled down, which could allow bears to take charge again.

    Looking down, the November 22 low of 1.0330 will be the key support. On the flip side, the November 20 high round 1.0600 will be the key barrier for the Euro bulls.

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