The EUR/USD pair is showing resilience, holding above the yearly low of 1.0333 as it recovers from a fresh monthly low of 1.0343. This rebound has helped keep the Relative Strength Index (RSI) above the oversold threshold of 30, signaling a potential stabilization in the exchange rate.
EUR/USD Technical Analysis
The pair’s ability to defend key support levels suggests that it may consolidate within the November trading range. The RSI’s movement away from oversold territory reinforces the possibility of a corrective rebound, especially as the recent U.S. Personal Consumption Expenditure (PCE) Price Index showed core inflation holding steady at 2.8% for November, slightly below forecasts of 2.9%.
Despite the limited market reaction to the inflation data, the EUR/USD remains under pressure following the Federal Reserve’s interest rate decision. The exchange rate continues to track below the 50-day Simple Moving Average (SMA) at 1.0644, aligning with its broader downward trajectory.
Key Levels to Watch
- Support at 1.0333: The yearly low remains a critical level. A breach below this could open the path toward 1.0200 (23.6% Fibonacci retracement) and potentially to 0.9950 (50% Fibonacci extension).
- Resistance at 1.0448–1.0480: A recovery above this zone could bring the 1.0580–1.0610 range back into focus, supported by Fibonacci retracement and extension levels.
- Monthly High at 1.0630: A break above this level could push the pair toward 1.0660 (61.8% Fibonacci extension), although the negative slope of the 50-day SMA may limit gains.
Outlook and Scenarios
- Bullish Scenario: If EUR/USD sustains its rebound and moves above 1.0448, it could aim for higher levels within the 1.0580–1.0610 range. A breach above the monthly high at 1.0630 would further signal bullish momentum, targeting the 1.0660 resistance level.
- Bearish Scenario: A failure to maintain support at 1.0333 could lead to a deeper decline toward 1.0200, with the potential for further losses down to 0.9950 if bearish pressure persists.
Broader Implications
The EUR/USD exchange rate remains influenced by diverging monetary policy stances between the Federal Reserve and the European Central Bank. The Fed’s higher interest rates and cautious approach to future rate adjustments continue to support the U.S. dollar, while the euro struggles to find upward momentum.
Traders should monitor upcoming economic data and central bank comments for clues about the next directional move. For now, the pair’s resilience above key support levels suggests some stabilization, but the broader bearish trend remains intact.
