EUR/USD drops below 1.04400

Source: Dukascopy Bank SA
After a slight pause in downward pressure, EUR/USD continued to drop, reaching a price level of 1.0345, driven by uncertainty surrounding the EU's economic outlook and the Fed's decision to cut interest rates.

Although the FX pair has recovered, the 50-hour and 100-hour simple moving averages are below 1.04330, which could be considered a signal for consolidation, provided no significant fundamental news occurs during the holiday period.

Economic Calendar Analysis


No significant volatility should occur from fundamental news during the holidays.

EUR/USD hourly chart analysis

The EUR/USD pair has been trading below the 1.04000 price level. This week has a higher probability of experiencing a price consolidation period around the 1.04580 level during the holidays, provided no significant price momentum occurs.

A decline in the FX rate is possible, as the simple moving averages on the hourly time frame suggest the rate is currently trading around these levels. If the 1.03450 support is broken, further price movement toward the 1.01550 level could occur if unexpected downside momentum develops.

Hourly Chart

EUR/USD daily chart's review

On the daily candlestick chart, the simple moving averages are significantly above the current FX rate. A price of 1.1550 could be a possible level if sudden geopolitical changes occur. The EUR/USD pair has been trading around the 1.045800 price level. A recovery towards 1.06300 could be considered only if fundamentals news have significant impact on reversal this week.



Daily chart




Traders stick to long positions






This week, traders had added to the long positions, as 69% were already long, 31% short. Everyone appears to be expecting a retracement back up.

Elevated volatility in the EUR/USD pair can significantly influence trading bias, driven by factors such as economic data, central bank decisions, geopolitical events, and market surprises. In volatile markets, traders often follow price trends, using momentum strategies to capitalize on rapid price movements. This can lead to a trend-following bias. However, volatility can also cause sudden shifts in market sentiment, creating bullish or bearish biases based on expectations of central bank actions or economic news.

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