18 November 2024, EUR/USD
EURUSD:
The Euro-dollar pair traded near 1.0550 during Monday's Asian trading session, staying close to the yearly low of 1.0496 reached on November 14. The pair's downside risks intensified after cautious comments from Federal Reserve (Fed) officials and stronger-than-expected US retail sales data, which provided broad support for the US dollar (USD).
Last week, Fed Chairman Jerome Powell tempered expectations of an imminent rate cut by emphasizing the resilience of the economy, a strong labor market and continued inflationary pressures. Powell stated, “The economy is not signaling that we need to rush to cut rates.”
The CME FedWatch Tool shows that markets are pricing in a nearly 60 percent probability of a 25 basis point Fed rate cut at the December meeting. The Euro continues to face downward pressure as the European Central Bank (ECB) maintains a dovish stance with a rate cut expected at its upcoming December meeting. Core inflation in the eurozone is projected to fall sharply to 2.4% in 2024 from 5.4% in 2023, before gradually declining to 2.1% in 2025 and 1.9% in 2026.
The European Commission's fall forecast for 2024 assumes the euro area economy will grow by 0.8% in 2024, unchanged from the spring forecast. However, the growth forecast for 2025 has been revised down slightly to 1.3% from 1.4%, and the eurozone economy is forecast to grow by 1.6% in 2026.
Trading recommendation: Trade mainly with Sell orders from the current price level.
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