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The euro is holding its ground with a quiet confidence, even as traders brace for what could be one of the most pivotal months of the year. With the Fed December meeting looming, whispers of a rate cut are rippling through markets, stirring both anticipation and caution. Across the Atlantic, the European Central Bank’s fiscal discipline and fresh macro data from Germany and France are painting a picture of resilience in the eurozone.
Against this backdrop, EUR/USD isn’t just moving on charts. It is reflecting the tug-of-war between policy divergence, investor sentiment and the broader risk mood.
Fed Cut Likelihood and ECB Fiscal Policy
Markets are focused on the Fed December meeting, where policymakers face one of their most challenging decisions of the year. Speculation of a rate cut has grown after recent data showed moderating inflation, but Fed officials remain cautious, emphasising the need for “greater confidence” before easing policy. This uncertainty has pressured the dollar, giving the euro room to extend gains.
On the European side, the fiscal stance remains of the ECB disciplined, with policymakers stressing budgetary restraint even as growth remains fragile. Recent macro data, including German IFO surveys, showed cautious optimism, suggesting that while growth is subdued, sentiment is stabilising.
EURUSD Technical Analysis
- Upside Targets: 1.1645 followed by 1.1660 as bullish extension levels
- Stop Level: 1.1570 would invalidate immediate bullish bias
- Breakout Trigger: Sustained move above 1.1660 confirms continuation of bullish trend
- Bullish Trend: Buy dips into around 1.1585, targetting 1.1645 and 1.1660, with stops below 1.1570.
- Counter-Trend Setup: Longs only if price breaks and holds above ~1.1660, signaling fresh bullish momentum.
- Range Play: Take long positions near 1.1585 and close out between 1.1645 to 1.1660 until breakout develops.
Looking Ahead: Policy Divergence Keeps Euro Supported
The bullish bias of EUR/USD remains intact while above 1.1570. The balance between Fed rate cut speculation in December and ECB fiscal discipline will be decisive for the next move. If the Fed signals easing, the dollar could weaken further, allowing EUR/USD to extend toward 1.1660 and beyond. Conversely, a hawkish Fed stance would test support levels, but the resilience of the Euro, backed by fiscal caution and stabilising macro data, suggests dips will continue to attract buyers.
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