(
MENAFN- Daily Forex) Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.0200.
- Add a stop-loss at 1.0400.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.0330 and a take-profit at 1.0410.
- Add a stop-loss at 1.0200.
The EUR/USD pair continued its strong downtrend, falling for five consecutive weeks, and reaching its lowest level since November 2022. It has dropped by almost 10% from its highest level in August 2024.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money US dollar index surge
The EUR/USD pair plunged as the US dollar index continued its strong rally. After falling to $100 in 2024, it soared to over $109 last week as investors flocked to the safe-haven currency.
The main reason for this crash is that there is a divergence between the United States and the European Union. Recent economic data showed that the European Union expanded by 0.4% in the third quarter and by 1% from Q3'23. Key countries like Germany and France are no longer growing.
The United States, on the other hand, is doing well. Analysts expect that the economy expanded by 2.7% in 2024. Its stock market is booming, with eight of its companies having a market cap of over $1 trillion.
Therefore, analysts expect that the Federal Reserve and the European Central Bank (ECB) will diverge. The Fed has hinted that it will deliver two interest rate cuts this year, while the ECB will deliver more cuts this year.
The EUR/USD pair has also plunged as the market waits for the upcoming Donald Trump inauguration. Trump has threatened that he will impose huge tariffs on European goods as long as the bloc didn't buy more US oil and gas.
The next key catalyst to watch on Monday will be the services and composite PMI data from Europe and the United States. Economists see the data showing that the German composite PMI fell to 47.8, while the European PMI rose slightly to 49.5. A PMI figure below 50 is usually a sign that a sector is contracting. In the US, the PMI is expected to be 56/USD Technical Analysis
The EUR/USD pair has been in a strong downward trend in the past few months as the US dollar index jumped. It has moved below the key support at 1.0450, a psychological level and its lowest point in October 2023.
The pair also slipped below the key support at 1.0333, its lowest level on November 2022. It has moved below the Ichimoku cloud indicator and to the ultimate support of the Murrey Math Lines.
Therefore, the EUR/USD exchange rate will likely keep falling as traders target the parity level at 1.000, which coincides with the extreme oversold point of the Murrey Math Lines.
EURUSD Chart by TradingView
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