EURUSD Slips Lower Ahead of the ECB Meeting

As the European Central Bank (ECB) meeting approaches, there are growing expectations for another 25 basis point rate cut, which has driven the EUR/USD lower. The growing global tensions, weakening Eurozone economy, and a more balanced FED have turned this pair bearish in October.

The pair slid below 1.09 yesterday, facing minimal resistance, though there remains some support, notably at the 50-day Simple Moving Average (SMA) that held yesterday’s lows. While the Federal Reserve appears more comfortable after its recent 50 basis point rate cut, the ECB has adopted a more dovish stance due to economic struggles in the Eurozone. As a result, markets now anticipate only a 25 basis point cut in November, which has put additional pressure on the EUR/USD .

Earlier this year, the EUR/USD enjoyed a strong upswing, rising from below 1.07 to reach 1.12 in June and July. However, resistance above 1.12 quickly halted this advance, and the pair began retreating, particularly after a sharp drop in early October. This led to a gradual decline below 1.10, and eventually, it fell under 1.09.

EUR/USD Chart Weekly – MAs Are Acting As Support on the Way Down

Contributing to this trend is the U.S. Federal Reserve’s approach, which has merely postponed, not abandoned, the prospect of further monetary easing. Now, attention is focused on Christine Lagarde’s upcoming press conference, which will be pivotal in understanding the ECB’s forward-looking policy, especially as a 0.25% rate cut is widely expected to be announced.

Eurozone and German ZEW Economic Sentiment for October

• Germany’s October ZEW survey for current conditions:
  • Came in at -86.9 points, below the expected -84.5 points
  • Previous reading was -84.5 points
• German economic sentiment:
  • Exceeded expectations with a reading of 13.1 points
  • Forecast was 10.0 points, up from a prior 3.6 points
• Eurozone economic sentiment:
  • Improved to 20.1 points, beating the forecast of 16.9 points
  • Previous reading was 9.3 points

EUR/USD Live Chart