Can EUR/USD Avoid Thanksgiving Slide? 1.03 Test Looms Ahead of US GDP, EZ CPI Data
2024.11.26 05:02
- EUR/USD faces critical support levels as traders eye pivotal U.S. and Eurozone data releases this week.
- Reduced liquidity from the Thanksgiving holiday could amplify volatility in the pair.
- Market focus remains on U.S. Treasury leadership and ECB rate cut expectations amid euro weakness.
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The pair slid sharply late last week, breaching the lower boundary of its long-standing sideways range near 1.05.
Weak economic data from the Eurozone’s industrial sector compounded selling pressure, while strength, fueled by Scott Bessent’s nomination as Treasury Secretary, added to the bearish momentum.
Although Bessent’s appointment briefly tempered the euro’s decline, the pair remains under significant pressure.
This week, traders’ attention turns to critical economic releases: U.S. data and Eurozone figures, which could provide fresh direction.
Additionally, with U.S. markets closing early on Friday for Thanksgiving, trading activity could see reduced liquidity, amplifying price swings.
Scott Bessent’s Nomination: A Calm Amid Market Jitters
President-elect Donald Trump’s rapid cabinet appointments continued to dominate headlines, with Scott Bessent’s nomination as Treasury Secretary drawing notable market focus.
U.S. stock indices recorded moderate gains on the news, while the dollar rallied, limiting EUR/USD’s ability to recover.
Markets see Bessent as likely to favor a balanced approach to trade and fiscal policy, mitigating fears of aggressive economic disruption.
Despite Bessent’s history as a close ally of George Soros, he has recently expressed alignment with Trump’s administration, signaling a potential shift in market dynamics.
However, lingering uncertainty over U.S. monetary policy and its implications for the euro-dollar exchange rate keeps the bearish trend intact.
Eurozone PMI Weakness Fuels Rate Cut Expectations
The euro’s slide deepened Friday after Eurozone PMI data painted a bleak picture. Both industrial and services sectors fell short of forecasts, remaining below the critical 50-point expansion threshold.
This contraction increases the probability of a 50-basis-point rate cut by the European Central Bank (ECB) in December, up from prior expectations of a 25 bps reduction.
The ECB’s recent warning of a looming debt crisis amid slowing growth underscores the urgency of additional monetary easing. As traders brace for further cuts, the euro could face mounting downward pressure.
Can the Euro Hold Support at 1.0350?
EUR/USD managed to pause its descent just below 1.04, spurring a modest rebound toward the 1.06 resistance area, where a key downward trendline lies. However, this upward move appears corrective, leaving the broader bearish trend unchallenged.
If sellers break the 1.0350 support level, a slide toward the psychological 1.03 mark seems likely. Conversely, a sustained push above 1.06 could reignite bullish sentiment, but that remains an uphill battle given the current macroeconomic backdrop.
For now, EUR/USD traders are gearing up for a week shaped by pivotal data and the Thanksgiving holiday’s thin trading conditions.
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