13 December 2024, EUR/USD
EURUSD:
The Euro-dollar pair remains subdued during the Asian session on Friday and hit a near three-week low around 1.0455 in the last hour. Moreover, the fundamental backdrop indicates that the path of least resistance for spot prices lies on the downside and supports the prospects for an extension of the recent downtrend.
The common currency continues to be undermined by the European Central Bank's (ECB) dovish attitude and concerns about the weakening eurozone economy. On Thursday, the ECB cut interest rates for the fourth time this year and left the door open for further easing in 2025. This is strongly at odds with expectations of a less dovish stance from the Federal Reserve (Fed) and confirms a negative outlook for EUR/USD.
US Consumer Price Index (CPI) and Producer Price Index (PPI) data released this week showed that progress in reducing inflation to the Fed's 2% target has virtually stalled. In addition, growing market confidence that US President Donald Trump's expansionary policies will increase inflationary pressures suggests that the Fed will take a more cautious stance on future interest rate cuts.
These prospects continue to support a further rise in US Treasury yields and help the US Dollar (USD) maintain its gains recorded over the past week and reach a new one-month high reached on Thursday. In addition, persistent geopolitical risks related to the Russia-Ukraine war and tensions in the Middle East, as well as fears of trade wars, support the USD and put downward pressure on EUR/USD.
Trading recommendation: Trade mainly with Sell orders from the current price level.
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