EUR Base Rate Against USD: November Highs Above 1.1000

US Dollar Against EUR Base Rate Remains Under Pressure Amid Santa Claus Rally on Wall Street

The EUR/USD pair is on the rise, targeting November highs above 1.1000 as the US Dollar faces continued downward pressure amidst the ongoing Santa Claus rally on Wall Street.

Euro’s Path to Further Gains

To pave the way for extended gains, the EUR/USD needs to surpass and maintain levels above 1.1000 convincingly. The bias in both daily and 4-hour charts favours an upside trajectory, with the Euro gaining strength for the second consecutive day.

Market Dynamics and Economic Indicators

Despite the Dollar’s overall negative context, the Euro’s climb is not solely due to its strength. Eurostat’s final figures for November inflation revealed a downward revision in the Harmonized Index of Consumer Prices, but the annual rate stood at a robust 2.4%. Additionally, key data releases, including Current Account, Construction Output, and Consumer Confidence, are expected to impact the currency pair.

Central Banks’ Stance

Both the Federal Reserve (Fed) and the European Central Bank (ECB) are pushing back against market expectations, yet the interest rate market signals potential rate cuts by April. This scenario, coupled with rising equity and commodity prices, contributes to the Dollar’s woes.

Mixed Data from the US Housing Sector

Tuesday’s mixed data from the US housing sector, with Housing Starts surpassing expectations and Building Permits falling below consensus, added complexity to the market dynamics. Wednesday’s Existing Home Sales data release is anticipated to provide further insights.

EUR/USD Technical Analysis

From a technical standpoint, the EUR/USD’s short-term outlook suggests further upside potential. While daily indicators favour an upward trajectory, a decisive close above 1.1000 is crucial. On the downside, breaching 1.0860 might indicate a deeper correction.

Broader Market Perspectives

Looking ahead, the Euro’s stability and potential breakout against the Dollar come amid global financial uncertainty. The strategic timing of Euro strength aligns with discussions around the potential approval of a spot Bitcoin ETF in the United States, adding another layer of complexity to the evolving market landscape.

US Dollar Retreats Across Major Currencies, Focus on Dovish Fed Signals

Traders Bet on Fed’s Rate Cuts in 2024, Impacting Key Currency Pairs

As traders anticipate a dovish turn from the Federal Reserve (Fed) in early 2024, the US Dollar retreats across major currency pairs, affecting EUR/USD, GBP/USD, USD/CAD, and USD/JPY.

Market Overview

• EUR/USD Gains Momentum: The EUR to USD pair gains upside momentum, breaching the 1.0950 level. Focus on Treasury yield pullback drives Euro strength.
• USD/CAD Tests New Lows: USD/CAD tests new lows as oil markets rebound, impacting the Canadian Dollar. The pair moves toward the next support level at 1.3275 – 1.3300.
• USD/JPY Moves Higher: USD/JPY climbs higher as the Bank of Japan (BoJ) maintains its ultra-dovish policy. Resistance at 144.65 – 145.00 is a key level to watch.

Dollar Buyback Rate and Housing Market Data

The U.S. Dollar Index pulls back in response to housing market data. Housing Starts to surge, but Building Permits decline, creating a mixed scenario for the Dollar. The nearest support for the U.S. Dollar Index is identified in the 101.75 – 102.00 range.

Currency-Specific Movements

USD/JPY’s BoJ Impact

• USD/JPY Reaction to BoJ: JPY to USD responds to the BoJ Interest Rate Decision, maintaining a bullish trend. Further upward movement may target resistance at 148.00 – 149.00.

In summary, the US Dollar’s retreat is evident across key currency pairs, setting the stage for potential shifts in the forex landscape. Traders closely monitor central bank signals and economic indicators for insights into the Dollar’s future trajectory.

• EUR/USD Upside: EUR base rate continues its upward trajectory, with a focus on the pullback in Treasury yields. Resistance lies at 1.1015 – 1.1035 if the pair sustains levels above 1.0950.
• GBP/USD Strength: GBP/USD gains ground amid the general weakness of the U.S. Dollar. A potential move above the 1.2750 level targets the resistance at 1.2820 – 1.2850.