20 December 2024, EUR/USD
EURUSD:
The Euro-Dollar pair continues to hover around 1.0360 during the Asian session on Friday, remaining close to the low reached the previous day. Current levels suggest the possibility of the lowest weekly close since November 2022. The pair's dynamics is influenced by the divergence in approaches to monetary policy between the ECB and the Fed.
Last week the ECB cut interest rates for the fourth time in a year and allowed further easing in 2025. In turn, the Fed said that the pace of rate cuts in 2025 will slow. This strengthens the position of the dollar and increases pressure on the euro, indicating the continuation of the EUR/USD downtrend.
Additional pressure is created by persistent geopolitical risks, uncertainty in the tariff policy of US President-elect Donald Trump and the threat of a US government shutdown. These factors support interest in the dollar, which reached a two-year high after the FOMC meeting.
The market is focused on the publication of the US Personal Consumption Expenditure (PCE) price index, which may affect investor sentiment. Nevertheless, the fundamentals remain favorable for the dollar. Even if the data comes in below forecasts, any dollar weakness and EUR/USD gains are likely to be temporary.
Trade recommendation: Trading mainly with Sell orders from the current price level.
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