The EUR/USD pair has been rising slightly above 1.0800 as investors await key macroeconomic data from the US and Eurozone. Traders are uncertain about the size of the ECB’s potential interest rate cut in December. The German economy’s risk of entering a recession has raised doubts about inflation remaining below the desired 2% rate, leading to speculation about the ECB’s rate-cut cycle.
The upcoming flash Q3 GDP data for Germany and the Eurozone will provide more insights into economic growth. Economists predict a contraction of 0.3% in German GDP for Q3 compared to the same period last year, while the Eurozone GDP is expected to expand by 0.8%. Additionally, preliminary HICP data for Germany and Spain will be released, with German inflation projected to grow at a faster rate of 2.1%.
In the daily forex market update, the EUR/USD pair is consolidating near 1.0800 as the US Dollar gains ahead of key US macroeconomic data releases. Market expectations for the Fed’s interest rate path will be influenced by data such as US PCE Price Index, Nonfarm Payrolls, and ISM Manufacturing PMI. Slower job growth could support expectations for Fed rate cuts in December, with markets pricing in a reduction of 25 bps in November and December.
Technical analysis shows that EUR/USD is hovering near 1.0800 but remains bearish below the 200-day EMA around 1.0900. The pair started a downside move after a Double Top formation breakdown near 1.1000 in September. The RSI indicates potential further downside, with support levels at 1.0750 and 1.0700 and resistance levels at 1.0900 and 1.1000.
The release of key economic indicators like Gross Domestic Product (YoY) by the Statistisches Bundesamt Deutschland will have an impact on the EUR. A higher-than-expected GDP reading is positive for the EUR, while a falling trend is seen as negative. Investors will be closely watching these data points to gauge the health of the Eurozone economy and potential monetary policy actions by the ECB in the coming months.
