US economy, Fed and techs suggest EUR/USD can still go down

Reuters

US economy, Fed and techs suggest EUR/USD can still go down

2024 11월 8, 오후 4:09 GMT

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Nov 8 (Reuters) -EUR/USD fell Friday and faces an elevated probability of sliding further as the U.S. economy appears robust, Fed cuts may slow and technicals highlight downside risks.

The November University of Michigan index came in at 73.0 against estimates for 71.0 and October's 70.5, which indicates consumer sentiment is rising.

Consumers' 1-year inflation outlook dropped to 2.6% from 2.7% in October which indicates price pressures are easing and inflation continues to head towards the Fed's 2.0% target.

Despite the falling inflation expectations, overall the data suggest the Fed may not have to cut as aggressively as investors had expected.

Fed Chair Jerome Powell said Wednesday the central bank will begin estimating the impact of President-elect Donald Trump's proposals, which may drive prices higher should tariffs be imposed and taxes decrease.

Meanwhile plans to make Europe's economy more competitive are being mulled, according to EU President Von Der Leyen and European Council President Charles Michel, but implementation will likely be far-off.

Those factors should keep German-U.S. spreads US2DE2=RR and Fed SRAM26 and ECB FEIZ5 terminal rate spreads in the dollar's favor.

EUR/USD techs suggest downside risks remain.

Falling daily and monthly RSIs imply downward momentum is in place, EUR/USD is holding below the 5-, 21- and 200-DMAs and the currency pair may be consolidating the drop from the Nov. 6 high.

A test of April's monthly low is possible and a drop below 1.0500 cannot be ruled out.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)

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