The return of Donald Trump to the US political landscape has sent shockwaves through the financial markets, with the EUR/USD exchange rate feeling the impact. Trump’s past protectionist policies and the possibility of their reintroduction are sparking concerns about potential inflationary pressures. This could prompt the Federal Reserve to maintain higher interest rates than previously anticipated, bolstering the dollar’s appeal.
The Fed’s recent decision to cut interest rates by 25 basis points to 4.75%, in line with market expectations, has further strengthened the greenback. While the Fed’s commentary suggested no major deviations from its planned rate trajectory, it hinted at continued easing. Looking ahead, another rate reduction of 25 basis points is expected at the Fed’s December meeting, signaling a continued cautious but steady approach to monetary easing.
Technical Analysis of EUR/USD
Technical analysis of the EUR/USD pair suggests a bullish outlook, with the pair having completed a bullish move towards 1.0820 as part of an ongoing upward impulse. Current market behavior suggests a retracement to 1.0758 before resuming its ascent towards 1.0833. This outlook is supported by the MACD indicator, which, although currently below zero, is trending upwards, signaling a potential bullish continuation.
On the hourly frame, EUR/USD appears to be undergoing a corrective phase towards 1.0758. Upon reaching this level, a rebound to 1.0833 is expected, followed by another potential pullback to 1.0758. The stochastic oscillator supports this outlook, with its signal line poised to rise towards 80, suggesting increasing bullish momentum.
The EUR/USD exchange rate is navigating a complex landscape influenced by political uncertainty and central bank policy. The combination of Trump’s return, the Fed’s actions, and technical signals points to a period of volatility with potential opportunities for traders. As always, investors should exercise caution and conduct thorough research before making any investment decisions.
