Last week, our technical indicators suggested going Long at or below 1.09465, setting a Stop Loss at 1.0801, and going Short at or above 1.09665, setting a Stop Loss at 1.1032.

This week, EURUSD price range was 1.1018 high, set yesterday, Wednesday, and 1.0909 low set today. So, Monday, we could have bought the currency pair at 1.0926, selling it on an intraday trading at 1.0959, for 0.61% profit. Tuesday, we could have bought it at 1.0935, selling it on an intraday trading at 1.1009, for 0.68% profit.  Also, Tuesday, we could have short it at 1.1009, covering it on an intraday trading at 1.09665, for 0.39% profit. Wednesday, we could have short it at 1.1017, covering it on an intraday trading at 1.0961, for 0.51% profit. Thursday, we could have bought it at 1.0908, selling it on an intraday trading at 1.0983, for 0.69% profit. Also, Thursday, we could have short it at 1.09665 covering it on an intraday trading at 1.091, for an extra 0.52% ROI.

 Fundamental Overview

The EURUSD pair extends the previous day’s retracement slide from the 1.1015 area, or its highest level since August 10 and drifts lower for the second successive day on Thursday. The pair drops to the 1.0920 area during the early European session and is pressured by a combination of factors.

Data released on Wednesday showed that German inflation decelerated more than expected in November and fell to 2.3%, or its lowest level since June 2021. Furthermore, core inflation, which excludes volatile food and energy prices, eased to 3.8% in November from 4.3% the previous month, fuelling speculations that the European Central Bank (ECB) might cut interest rates next year. This, in turn, is seen undermining the shared currency. The US Dollar (USD), on the other hand, attracts some follow-through buying and recovers further from a three-and-half-month low touched on Wednesday. This, along with some repositioning trade ahead of the key inflation readings from the Eurozone and the US, turns out to be key factors exerting pressure on the EURUSD pair.

The downside, however, seems cushioned as traders might refrain from placing aggressive bearish bets around the shared currency in the wake of the hawkish European Central Bank’. ECB Governing Council member Yannis Stournaras cautioned on Wednesday against premature bets on when interest rates will be lowered. This comes on top of minutes of the October ECB monetary meeting published last Thursday, which showed that the governing council is open to increasing interest rates further to safeguard price stability. Hence, the flash Eurozone CPI will play a key role in influencing the Euro and provide some impetus to the EURUSD pair. The market attention will then shift to the US Personal Consumption Expenditures (PCE) data.

The core PCE Price Index, which is the Federal Reserve’s (Fed) preferred benchmark for measuring long-term trends, will be looked upon for confirmation that inflation is slowing and might influence expectations when the central bank could start cutting rates in 2024. Some Fed officials recently suggested that loosening may come earlier if inflation continued to decline. Fed Governor Christopher Waller on Tuesday flagged a possible rate cut in the months ahead. Furthermore, Atlanta Fed President Rafael Bostic on Wednesday said that he believes inflation is coming down. Adding to this, Cleveland Fed President Loretta Mester saw clear progress in getting inflation back to the 2% target, reinforcing speculations that interest rates in the US have peaked.

Moreover, the current market pricing suggests that the Fed may begin easing its monetary policy as early as March 2024. Hence, the crucial inflation data will play a key role in driving the USD in the near term and provide some meaningful impetus to the EUR/USD pair. Heading into the key data risk, the disappointing release of Chinese PMI prints for November tempers investors’ appetite for riskier assets and is seen acting as a tailwind for the safe-haven buck.

Technical Analysis

EURUSD drops toward 1.0900 after softer EU inflation data, US PCE eyed.

EURUSD is accelerating its slump toward 1.0900 after softer-than-expected Euro area inflation data boosted ECB rate cut expectations. The pair is also weighed down by the extended US Dollar recovery. All eyes are now on the US PCE inflation data.

From a technical perspective, failure to capitalize on this week’s breakout momentum through the 61.8% Fibonacci retracement level of the July-October downfall warrants some caution for bullish traders. That said, oscillators on the daily chart are holding comfortably in the positive territory.

Moreover, the Relative Strength Index (RSI) on the said chart has eased from overbought conditions and supports prospects for the emergence of some dip-buying at lower levels. This, in turn, suggests that the EURUSD pair is likely to find some support near the 1.0900 mark, which if broken should pave the way for a slide towards the 50% Fibo. level, around the 1.0860 region. Some follow-through selling might expose the 1.0770-1.0765 confluence, comprising the 100-day Simple Moving Average (SMA) and the 38.2% Fibo. level.

On the flip side, bulls might now wait for some follow-through buying and acceptance above the 1.1000 psychological mark before placing fresh bets. The EURUSD pair might then accelerate the positive move and aim to test the August monthly swing high, around the 1.1065 area. The momentum could get extended further towards the 1.1100 round figure, above which spot prices could climb to the next relevant hurdle near the 1.1150 region (July 27 swing high).

For next week, as the EURUSD retreats from 1.1000, our technical signals point to a retracement. The currency pair, after reaching its highest level since August, experiences a pullback below the key psychological level of 1.10. The US Dollar (USD) manages a modest recovery from its near four-month low, creating a headwind for spot prices as the market shows slightly overbought conditions on the daily chart.

From a technical perspective this morning, the price displays a divergence in the RSI on the H1 timeframe. Despite a fake breakout attempt to surpass 1.1000, the price is now positioned for a potential retracement, targeting the 50% Fibonacci zone from the previous swing low.

Hence, and for next week, our technical analysis are suggesting going Short at or above 1.09, setting a Stop Loss at 1.1032, and going Long at or below 1.0930, setting a Stop Loss at 1.0840.

As of 11:36 AM (GMT), the EURUSD was trading at 1.09128.


EUR to USD forecast for tomorrow Euro to US Dollar forecast on Friday, December, 1: exchange rate 1.095 US Dollars, maximum 1.111, minimum 1.079. EUR to USD forecast on Monday, December, 4: exchange rate 1.099 US Dollars, maximum 1.115, minimum 1.083. Euro to US Dollar forecast on Tuesday, December, 5: exchange rate 1.101 US Dollars, maximum 1.118, minimum 1.084. EUR to USD forecast on Wednesday, December, 6: exchange rate 1.104 US Dollars, maximum 1.121, minimum 1.087.


In 1 week, Euro to US Dollar forecast on Thursday, December, 7: exchange rate 1.106 US Dollars, maximum 1.123, minimum 1.089. EUR to USD forecast on Friday, December, 8: exchange rate 1.103 US Dollars, maximum 1.120, minimum 1.086. Euro to US Dollar forecast on Monday, December, 11: exchange rate 1.100 US Dollars, maximum 1.117, minimum 1.084. EUR to USD forecast on Tuesday, December, 12: exchange rate 1.103 US Dollars, maximum 1.120, minimum 1.086. Euro to US Dollar forecast on Wednesday, December, 13: exchange rate 1.109 US Dollars, maximum 1.126, minimum 1.092.

Until next article, wishing all of you wealthy trading!






Disclosures: The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any interests in the EUR/USD or any other securities. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Pedro Ferreira. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of the EUR/USD or any underlying security.  Further, Pedro Ferreira is not long or short in the currency pair. Past investment results of any underlying managers should not be viewed as indicative of future performance of the EUR/USD.


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