EUR/USD price threatens 1.0500 support as ECB fuels bearish momentum
Euro slides 1% against USD, ECB signals rate cut amid bearish sentiment
The EUR/USD pair has faced relentless selling pressure this week, sliding 1% from the 1.0600 resistance level to test the critical 1.0500 support. This marks a three-day low, with bulls attempting to stabilize the pair above 1.0500. Despite their efforts, the downside momentum persists, leaving the euro vulnerable to further declines.
The European Central Bank (ECB) is also fueling bearish sentiment, as policymakers signal growing concerns about Eurozone economic growth. François Villeroy de Galhau, the Governor of the Bank of France, emphasized a shift in risks to the downside for both growth and inflation. Markets now anticipate a 25 basis point rate cut in December, which would lower the Deposit Facility Rate to 3%.
ECB officials appear eager to adopt a more aggressive policy-easing cycle, targeting a neutral rate by 2025. This dovish stance has dampened investor confidence, adding to the euro’s weak performance against a resilient US dollar.
Attention shifts to PMI data as RSI points to bearish EUR/USD outlook
Attention now turns to Friday’s flash Purchasing Managers’ Index (PMI) data for November. The Eurozone’s private sector activity is expected to hover near the expansionary borderline. As such, investors will scrutinize these figures to gauge economic health and forward demand, with a weak reading likely to amplify concerns about the region’s growth outlook.
Technically, the EUR/USD shows no signs of relief. The Relative Strength Index (RSI) remains above oversold levels, suggesting room for more downside. A break below the 1.0500 support would open the door to the 1.0450 level, a multi-year low for the pair.
Traders should watch the 1.0500 support zone closely. A sustained break could set the stage for extended losses, especially if Friday’s PMI data fails to inspire confidence.
EUR/USD price remains under pressure despite eurozone wage growth climbing to 5.42%. A recovering dollar index is limiting the euro's upward momentum.
