FxNews—The dollar index remained above 105 on Thursday, reaching its highest level in four months as investors waited for the Federal Reserve’s decision on interest rates. The Fed is likely to lower rates by 25 basis points today. Traders are also looking for clues about possible rate cuts in December.
Following Donald Trump’s election victory on Wednesday, the dollar rose nearly 2%. The Republicans took back the Senate, which might lead to big law changes, although the situation in the House of Representatives is still unclear.
Trump’s Economic Plans Could Surge Dollar and Inflation
Trump’s goals include reducing illegal immigration, increasing tariffs, cutting taxes, and reducing regulations, which could boost economic growth and inflation. The anticipation of higher government spending and more national debt also strengthened the dollar and increased Treasury yields. The dollar continued its strong performance, trading at its highest levels in months against other key currencies.
EURUSD Technical Analysis – 7-November-2024
The EUR/USD was oversold yesterday, so the price began consolidating near the October 23 low at $1.076 amid speculations on Fed rate cuts scheduled for today.
Interestingly, the 4-hour chart formed a bullish engulfing pattern, but the candle did not emerge at the bottom; hence, it should be ignored. Furthermore, the Awesome Oscillator histogram shows bullish momentum increasing, with green bars, but it is still below the signal line.
Overall, the technical indicators and candlestick patterns suggest that the primary trend is bearish because EUR/USD is below the 50- and 100-period simple moving averages. That said, the pair has the potential to consolidate near the upper resistance levels.
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EURUSD Forecast – 7-November-2024
The October 23 low at 1.076 is the immediate resistance. The EUR/USD price is likely to exceed this level. If this scenario unfolds, the consolidation phase could extend to the %50 Fibonacci retracement level, backed by the bearish fair value gap area. This level provides a decent bid to join the bear market.
Therefore, traders and investors should closely monitor the resistance area expanding from 1.081 to 1.084, backed by the 100-SMA, for bearish signals. Please note that the bear market should be invalidated if EUR/USD exceeds the 78.6% Fibonacci retracement level at 1.088.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
