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At the end of last week, the Euro traded around $1.09, its weakest level in about two months, driven by the overall strength of the US dollar amid expectations that the US federal Reserve will cut borrowing costs at a slower pace than expected. In Europe, the European Central bank is expected to cut its deposit rate by 25 basis points when it meets this week, following similar moves in both September and June.
In general, traders are now betting that the
ECB will continue to cut costs by a quarter point at each meeting until March. Annual inflation in the Eurozone fell to 1.8% in September 2024, its lowest level since April 2021.
According to stock trading platforms, Eurozone stocks closed the week in the green. European stocks closed higher on Friday, benefiting from a positive start to the session for their North American counterparts, supported by a positive start to the US earnings season, while investors evaluated a range of economic data. The French budget for 2025, which includes spending cuts and tax increases on corporations, the wealthy, and energy, has also been under close scrutiny. The Stoxx 50 Eurozone index rose 0.7% to close at 5003, and the Stoxx 600 European index added 0.5% to close at 522. Shares of large industrial companies led the gains, with Siemens, Schneider, Airbus, and Safran adding between 4% and 1%. Bank and insurance stocks in the region also closed strongly in the green, with Munich Re and Intesa Sanpaolo adding more than 1% each. On the other hand, Stellantis shares fell by about 4% after announcing a series of changes in its leadership.
According to the economic calendar, with the ECB's decisions awaited. In the United States, all eyes will be on retail sales, which are expected to show a 0.3% increase in September, up from a 0.1% increase in August. On the other hand, US industrial production is likely to contract by 0.1%, following a strong 0.8% increase in August.
On the other hand, US industrial production is likely to contract by 0.1%, after a strong increase of 0.8% in August. Other key economic data to follow include the Empire State Manufacturing Index in New York, the Philadelphia Fed Manufacturing Index, consumer inflation expectations, export and import prices, the National Association of Home Builders Housing Market Index, building permits and housing starts. Several US Federal Reserve officials are also scheduled to appear. In addition, the earnings season will be in full swing with several companies announcing quarterly results including UnitedHealth, J&J, Bank of America, Goldman Sachs, Citigroup, Charles Schwab, Abbott, Morgan Stanley, Netflix, Blackstone, P&G, and American Express.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money EUR/USD Technical analysis and forecast:
This week, the European Central Bank will take centre stage as it is set to deliver another 25-basis-point cut in the main deposit rate, in line with previous cuts in September and June. Ahead of the important event, the EUR/USD pair is stabilizing downwards, and according to the daily chart, the downward channel formation is gaining strength towards the current prominent support level of 1.0880, which in turn will push technical indicators towards oversold levels. Today is a US holiday, so liquidity will be lower, and therefore the EUR/USD pair may move in narrow ranges with a downward bias until any new developments.
Conversely, for the bulls to exit the downward channel, the EUR/USD pair must move towards the resistance levels of 1.1055 and 1.1130, respectively.
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