The EUR/USD pair declined for the fifth consecutive day, posting modest losses as selling pressure persisted ahead of key central bank meetings scheduled for this week. Despite a temporary recovery in French government bonds following Moody’s decision to maintain France’s credit rating rather than downgrade it, pressure on the single European currency soon returned. The euro has now recorded weekly losses in six of the past eight weeks, reflecting the lack of strong catalysts capable of supporting a sustained upward recovery.
The euro continues to face increasing pressure from the widening yield spread between French and German government bonds, alongside persistently elevated oil prices, which remain a major obstacle to the currency’s recovery. Energy markets continue to reflect geopolitical risks and the possibility of renewed escalation involving Iran. These developments have helped keep US Treasury yields supported, limiting the potential for a meaningful decline in the dollar. Meanwhile, investor appetite for the euro and other currencies exposed to higher energy import costs has weakened.
Financial markets are closely monitoring upcoming monetary policy decisions from the Federal Reserve and the European Central Bank. Expectations suggest that the Federal Reserve may leave interest rates unchanged at its current meeting, although the possibility of a rate increase in December has not been ruled out, providing continued support for the US dollar. Meanwhile, the European Central Bank faces a difficult policy environment, balancing inflationary pressures caused by rising oil prices against weaker equity markets, the euro’s recent depreciation, and ongoing economic challenges in France. Under these conditions, maintaining interest rates while adopting a hawkish policy stance appears to be the most likely outcome.
From a technical perspective, the bearish trend continues to dominate EUR/USD price movements, with the pair’s inability to establish a meaningful corrective rebound indicating persistent selling pressure. Attention is increasingly focused on a potential test of the key psychological support level at $1.1000 in the coming sessions, particularly if Federal Reserve officials deliver more hawkish guidance than markets currently expect. The $1.1113 level represents the initial downside target, while $1.1200 and $1.1250 remain important resistance levels. A sustained breakout above these levels could open the way toward the more significant resistance zone between $1.1300 and $1.1350.
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