- EUR/USD hits 18-week high on Friday.
- Pre-holiday markets are producing some rough chop heading towards the Friday close.
- Slowing US inflation is pushing down the Greenback as markets bet on rate cuts.
The EUR/USD soared to an impressive 18-week high at 1.1040 before easing back to 1.1000 as traders prepare for the holiday break. The US inflation data released on Friday fell short of expectations, further fueling expectations of Federal Reserve (Fed) rate cuts in 2024. The US Personal Consumption Expenditure (PCE) Price Index softened more than anticipated, with the Core Annualized PCE Price Index printing at 3.2% for the year through November, below the forecast of 3.3%.
According to money markets, the expectations of a faster pace of rate cuts by the Federal Reserve (Fed) in 2024 are increasing due to declining inflation metrics. This creates a contrast with the Fed’s own projections, which foresee fewer reduction rates. There are mixed signals as the market’s USD-short momentum was limited by a beat in US Durable Goods Orders, indicating that the US economy may be more resilient than anticipated. Despite the US Dollar’s moderate pullback, the Greenback remains down on the week against the Euro.
The market’s technical details and figures indicate a bullish trend, with the potential for a green close for the EUR/USD for seven out of the last nine trading weeks. The bullish sentiment was evident in the technical support flags in the pair’s upward trajectory from October’s early lows. Additionally, the EUR/USD technical outlook points to the 200-day Simple Moving Average (SMA) rising towards 1.0850.
For more information, check out the detailed charts below:
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