The EUR/USD may continue to decline as the US dollar receives support from Trump | 07 November 2024

Event to pay attention to today:

21:00 EET. USD - FOMC Rate Decision

EURUSD:

The EUR/USD pair has retained its value following a decline of approximately 2% in the previous session, with a trading price of around 1.0740 during the Asian session on Thursday. There is a possibility that the EUR/USD pair may decline further, as the US dollar may receive support from Trump-related deals following the Republican victory in the US election.

If Donald Trump's Republicans gain control of both houses of Congress, they will have significant powers for the first time in eight years to implement a broad programme of tax and spending cuts, energy deregulation and border security.

According to Reuters, Republican lawmakers and aides have indicated that the new administration's priorities are likely to include extending tax cuts passed by Trump in 2017, funding for a wall on the US-Mexico border, cutting unspent Democratic funding, eliminating the Department of Education and limiting the powers of agencies such as the Consumer Financial Protection Bureau.

It is anticipated that the U.S. Federal Reserve (Fed) will reduce the benchmark interest rate by 25 basis points at its meeting on Thursday. The CME FedWatch Tool indicates a 98.1% probability of a quarter-point rate cut by the Fed in November, reflecting a strong market consensus for a modest rate adjustment this week.

In the event of a slowdown in economic growth in Europe as a result of the impact of Trump's tariffs, the European Central Bank (ECB) may be compelled to take decisive action, including the possibility of cutting rates to almost zero by 2025, as reported by Euronews. It is anticipated that the ECB will cut the deposit rate by the usual 25 basis points in December.

There is a paucity of EU market data this week. The release of EU retail sales data is scheduled for Thursday, with the EU leaders' summit concluding on Friday. Additionally, ECB President Lagarde is scheduled to deliver a speech on Saturday.

Trading recommendation: Trading mainly by Sell orders from the current price level.

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