Current dynamics

The EUR/USD pair has been declining for the second month in a row: on Friday, quotes reached their lowest levels since November 2022 in the region of 1.0332, then partially compensated for the lost positions, but at present the downward dynamics are intensifying again.

The American currency is supported by new comments from US President-elect Donald Trump, who said the day before that on his first day in office he would impose a 25.0% tariff on all goods coming from Mexico and Canada, as well as an additional 10.0% on products made in China, causing a mixed reaction from the market: some experts noted that the tariffs aimed at China turned out to be significantly lower than the previously assumed 60.0%, increasing the likelihood that a serious trade conflict will be avoided. However, some investors are concerned that the announced plans will be adjusted over time. In addition, the current strengthening of the dollar is limited, since at 21:00 (GMT 2) the market is expecting the publication of the minutes of the latest meeting of the US Federal Reserve, which may determine further actions of the monetary authorities. Recent comments suggest that there is no consensus within the agency on the advisability of cutting interest rates in December: some officials, led by Jerome Powell, question this move, while Minneapolis Fed President Neel Kashkari believes that a 25 basis point cut in borrowing costs at the next meeting is entirely reasonable. Thus, any new hints of a pause in the easing cycle in the US could lead to further strengthening of the American currency.

The euro is under pressure after the publication of November business activity data on Friday, which turned out to be negative: the index for the services sector was 49.2 points, the indicator for the industrial sector was 45.2 points, and the composite indicator was 48.1 points. Thus, the economy is in a state of crisis, but the European Central Bank (ECB) does not intend to seriously reduce interest rates yet. In particular, the day before, the head of the German Federal Bank Joachim Nagel and the ECB chief economist Philip Lane said that in order to completely defeat inflation, it is necessary to reduce the cost of borrowing gradually, without taking drastic steps.

Thus, the medium-term fundamental background favors the continuation of the downward dynamics of the EUR/USD pair.

Support and resistance levels

The key level for the bears seems to be 1.0376 (Murray level [1/8]), a repeated breakout of which will allow quotes to continue their decline to the targets of 1.0131 (Murray level [˗1/8]) and 1.0009 (Murray level [˗2/8]). If the level of 1.0645 (Fibonacci correction 38.2%, middle line of Bollinger bands) is broken upwards and consolidated above it, the upward dynamics may strengthen to the area of 1.0945 (Fibonacci correction 50.0%), but such a scenario seems less likely for now.

Technical indicators point to the continuation of the downward trend: Bollinger bands are directed downwards, MACD is increasing in the negative zone, Stochastic is turning upwards, not excluding corrective growth, but its potential looks limited.

Resistance levels: 1.0645, 1.0945.

Support levels: 1.0376, 1.0131, 1.0009.

Trading scenarios

Short positions should be opened below the 1.0376 mark with targets at 1.0131, 1.0009 and stop loss at 1.0530. Implementation period: 5–7 days.

Long positions can be opened above 1.0645 with a target of 1.0945 and a stop loss of 1.0440.