The Euro is under siege, and the outlook remains grim. As EUR/USD slides to two-year lows near 1.0330, the fundamental and technical backdrop suggests further downside.
Geopolitical pressures, a resurgent US Dollar, and a faltering European economy create a perfect storm for the single currency. Traders should prepare for what may be a swift return to parity.
Key Highlights This Week
EUR/USD at Two-Year Lows:The pair continues its fourth-quarter downtrend, losing 8% since late September. The relentless rise of the US Dollar and worsening Eurozone conditions add to the pressure.
Why Parity is Back on the Table:
The Russia-Ukraine conflict and Europe's energy insecurity.
Weak German economic indicators, compounded by political instability.
A hawkish Federal Reserve contrasted with a dovish European Central Bank (ECB).
The Dollar's Domination:The US Dollar Index (DXY) surged above 108.00, buoyed by safe-haven flows and speculation around U.S. fiscal and monetary policy shifts in 2025.
Tech Analysis: EUR/USD
Key Levels:
Support: 1.0330 (2024 low), 1.0290, and 1.0220.
Resistance: 1.0606 (weekly high) and 1.0857 (200-day SMA).
Indicators:
RSI signals extreme oversold conditions at 16, hinting at the possibility of temporary corrections.
ADX at 49 underscores a strong bearish trend.
What’s Driving This Move?
Diverging Monetary Policies:
Federal Reserve: While the Fed recently cut rates, it maintains a cautious tone, signaling restraint in further easing.
European Central Bank: The ECB faces limited options, with markets pricing in more aggressive rate cuts than the Fed in the coming year.
Geopolitical Pressures:Continued instability in Eastern Europe undermines confidence in the Eurozone economy, while the U.S. gains from its safe-haven status.
Economic Indicators to Watch:
Flash inflation data for the Eurozone (Nov 29).
U.S. labor market reports and consumer confidence updates.
Trading Plan for EUR/USD
Action: 🔴 Sell
Entry Point: 1.0450
Stop Loss: ⛔ 1.0520
Take Profit: 🎯 1.0300
Timeframe: ⏳ 2-5 days
Rationale: With the Eurozone struggling and the USD retaining its bullish momentum, a bearish trade aligns with both technical and fundamental indicators.
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