EUR/USD posts fresh 10-week low ahead of ECB policy meeting

• EUR/USD remains fragile near 1.0850 as the ECB lowers the Rate on the Deposit Facility by 25 bps to 3.25%.
• The ECB is expected to cut its key borrowing rates by 25 bps again in December.
• Growing speculation for Trump’s victory has strengthened the US Dollar.

EUR/USD remains under pressure near 1.0850 on Thursday. The major currency pair stays on backfoot as the European Central Bank (ECB) has reduced its Rate on Deposit Facility by 25 basis points (bps) to 3.25%. This is the second 25 bps interest rate cut by the ECB in a row.

A dovish decision from the ECB was widely anticipated as the Eurozone economy appears to be on the path of an economic slowdown, with price pressures seeming under control. The Eurozone Harmonized Index of Consumer Prices (HICP) has decelerated to 1.7% in September, faster than expectations and the preliminary estimate of 1.8%, according to revised estimates. The latest economic projections from the German economic ministry showed that the nation is expected to conclude the year with a decline in the overall output by 0.2%.

Going forward, investors will pay close attention to ECB President Christine Lagarde ’s press conference to get fresh cues about the likely monetary policy action in December.

Traders were already expecting the ECB to reduce borrowing rates further by 49 basis points (bps) in the remaining two meetings this year, according to a note from Citi on Tuesday, suggesting that there will be two rate cuts of 25 bps on Thursday and in December.

Finance news Daily digest market movers: EUR/USD extends losing spell for fourth trading day

• EUR/USD extends its losing streak for the fourth trading day on Thursday. The major currency pair declines to a more than 10-week low near 1.0850 as the US Dollar (USD) has performed strongly in the past few weeks. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, jumps to near 103.60, the highest level seen in over two months.
• The Greenback remains firm as traders have priced out expectations of the continuation of hefty rate cuts from the Federal Reserve (Fed) and growing speculation of former US President Donald Trump’s victory in presidential elections, scheduled on November 5.
• Market participants expect the Fed to cut interest rates moderately in the remainder of the year as fears of a United States (US) economic slowdown have been subsided by robust growth in the Nonfarm Payrolls (NFP) and the Services Purchasing Managers’ Index (PMI) data for September.
• Meanwhile, Trump’s victory over Democratic Vice President Kamala Harris is expected to result in higher tariffs on imports from Asian and European peers, tax cuts, and loosening financial conditions that will benefit the US Dollar.
• On the economic front, investors will focus on the US monthly Retail Sales data for September, which will be published at 12:30 GMT. Economists expect Retail Sales to have grown by 0.3%.

Finance news Technical Analysis: EUR/USD sees more downside toward 1.0800

EUR/USD slides to near 1.0850 in early North American trading hours. The major currency pair extends its downfall after breaking below the 200-day Exponential Moving Average (EMA), which trades around 1.0900, earlier this week.

The downside move in the shared currency pair started after a breakdown of the Double Top formation on a daily timeframe near the September 11 low at around 1.1000, which resulted in a bearish reversal.

The 14-day Relative Strength Index (RSI) dives below 30.00, indicating a strong bearish momentum. 

On the downside, the major could find support near the round-level figure of 1.0800 and upward-sloping trendline at 1.0750, which is plotted from the October 3 low around 1.0450. Meanwhile, the 200-day EMA and the psychological figure of 1.1000 will be the key resistances for the pair.

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