- Data revealed moderate growth in US consumer spending for October.
- Investors are awaiting comments from Fed Chair Jerome Powell later on Friday.
- Data revealed that Eurozone inflation experienced a more significant-than-expected decline.
The EUR/USD price analysis unfolds as the dollar dips, allowing the euro to climb slightly after absorbing substantial overnight losses. Traders evaluated data revealing a drop in Eurozone inflation. Consequently, they are buzzing with expectations that interest rates may have reached their end.
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Meanwhile, the dollar index had its weakest monthly performance in a year in November despite a 0.6% overnight surge. Thursday’s data revealed moderate growth in US consumer spending for October and the smallest annual increase in inflation in over 2-1/2 years.
The eagerly anticipated PCE price index rose 3% in October compared to the previous year. It slowed from a three-month streak of 3.4% values. The value is still above the Fed’s 2% target. However, it is a new low that could please the Fed and reduce pressure for additional hikes.
Investors will now shift their focus to comments from Fed Chair Jerome Powell later on Friday. Traders will scrutinize every word for insights into the rate outlook. Carol Kong, a currency strategist at the Commonwealth Bank of Australia, anticipates Powell will reaffirm the possibility of further tightening. Moreover, he will likely temper expectations of rate cuts.
In Europe, Thursday’s data revealed that Eurozone inflation experienced a more significant-than-expected decline for the third consecutive month in November. As a result, there are expectations of early spring rate cuts. The data resulted in a 0.7% decline in the euro on Thursday.
EUR/USD key events today
- The US ISM manufacturing PMI
- A speech from Fed Chair Powell
EUR/USD technical price analysis: Bears take over after bearish RSI divergence
The bearish RSI divergence on the 4-hour chart played out, leading to a shift in sentiment for EUR/USD. The bulls were no longer strong enough to continue the uptrend. As a result, bears emerged with bigger candles, showing strong momentum. It was clear the trend had reversed when the price broke below the support trendline and the 30-SMA.
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At the same time, the RSI fell below 50, confirming that bears were stronger than bulls. Currently, the price is heading for the next support level at 1.0851. The final step for bears to confirm a downtrend will be a series of lower lows and highs.
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- Source: https://www.forexcrunch.com/blog/2023/12/01/eur-usd-price-analysis-euro-struggling-after-overnight-losses/
