EUR/USD Outlook: Key Levels to Watch as Pair Struggles Below 1.0800 Post-Fed Rate Cut
The EUR/USD pair faces renewed pressure, trading below the 1.0800 mark after the U.S. Federal Reserve announced a rate cut of 25 basis points, adjusting the target range to 4.5%-4.75%.
This decision, aligned with market expectations, reflects the Fed’s balanced approach to inflation and labor market risks. Although initially buoyed by investor reactions to the recent U.S. presidential election, the U.S. dollar saw some profit-taking before the Fed meeting. In Friday’s European trading session, EUR/USD is down 0.19%, trading at $1.0781, as the cautious market sentiment limits the pair’s ability to hold gains.
Key Resistance Levels Challenge EUR/USD’s Upside Potential
Since failing to break the pivot level at $1.08115, the EUR/USD pair has encountered significant resistance. Immediate resistance lies at $1.08558, with higher barriers at $1.08921 and $1.09363.
#EURUSD slips below 1.0800 as Trump’s tariff plan and #ECB rate cut speculation put pressure on the Euro! Keep an eye on the Fed’s data-dependent policy moves. Is this the start of a new trend? 📉
#ForexTrading #MarketAnalysis #ForexNews #USDStrength #TradingStrategy #XAUUSD pic.twitter.com/ImhfB3uav9
— Fiona wilson (@fxtrader_fiona) November 8, 2024
These levels pose challenges for the euro’s bullish prospects, particularly in the context of neutral market sentiment. As the Relative Strength Index (RSI) hovers near 48, sentiment remains uncertain, suggesting limited upward momentum unless the pair can decisively breach these resistance levels.
Resistance Levels to Monitor:
Immediate Resistance: $1.08558
Next Resistance: $1.08921
Further Resistance: $1.09363
These barriers could dampen any potential rally, especially if investor caution persists through the U.S. market open.
Downside Risks Remain with Strong Support Levels
On the downside, EUR/USD finds immediate support at $1.07463. Additional support levels at $1.06982 and $1.06471 could attract attention if selling pressure increases. This bearish outlook is reinforced by the 50-day Exponential Moving Average (EMA), positioned at $1.08229, which serves as dynamic resistance. This EMA level underscores a potential bearish stance, suggesting that upward moves may remain capped unless a breakout above $1.08229 occurs.
Key Support Levels to Watch:
Immediate Support: $1.07463
Next Support: $1.06982
Further Support: $1.06471
These levels will be closely monitored as any downward shift could trigger additional selling activity in the near term.
EUR/USD tumbles below 1.0800 on Trump’s tariff plan.
-EUR/USD depreciates to around 1.0780 in Friday’s Asian session, down 0.20% on the day.
-Future Fed policy decisions are still data-dependent after a 25 bps rate cut on Thursday.#eurusd #DonaldTrump #asiansession #marketupdate pic.twitter.com/8SblirQ97p— Afreen Sheikh (@Afreensheikh324) November 8, 2024
Fed’s Rate Cut and U.S. Data to Influence Short-Term Trends
The market’s response to the Fed’s rate cut has been relatively muted. The FedWatch Tool places a 70% likelihood on a further 25 bps cut in December, leaving traders attentive to upcoming U.S. economic data, including the University of Michigan’s Consumer Sentiment Index for November.
If market caution continues after the Wall Street open, the U.S. dollar’s strength may weigh further on the EUR/USD, curtailing any immediate rebound efforts.
In summary, with EUR/USD under 1.0800, resistance levels and cautious sentiment set the stage for limited upside potential. Key support zones may come into play if the dollar holds its ground, potentially favoring sellers below $1.08112, with a target of $1.07455 and risk managed with a stop-loss at $1.08549.
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