Euro – Dollar Rises as Fed Lowers Expectations for December Rate Cut

The dollar index approached the 100 on Friday, reaching a high of 99.84, and recorded a monthly gain of over 2% in October, its best performance since July. According to the CME Group's FedWatch tool, federal funds futures traders now predict a 63% probability of a December rate cut, down from 93% a week ago. Meanwhile, the euro fell after the European Central Bank kept interest rates unchanged at 2% for the third consecutive meeting last Thursday, reiterating that policy is in a "good place" as economic risks have subsided; the euro fell about 1.8% in October due to a broad-based dollar rally.

The euro fell as low as 1.1520 against the dollar on Friday, initially breaking below the multi-day lows of mid-month, where a small bottom had formed. If the exchange rate remains below this area this week, and the charts show declining RSI and stochastic indices, the euro/dollar pair may face further pressure. Initial resistance levels to watch are 1.1580 and the 25-day moving average at 1.1650, with stronger resistance expected at 1.18 and 1.1850. The supporting levels are at 1.15 and 1.14, with the next level at 1.1370. Key support lies at the 200-day moving average at 1.1315.

Forecast range:

Resistance: 1.1580 - 1.1650 - 1.1800 – 1.1850

Support: 1.1500* - 1.1400* - 1.1370 - 1.1315

Key Focus:

Monday: Eurozone October Manufacturing PMI

Wednesday: Germany September Industrial Orders (15:00)
Eurozone October Services PMI
Eurozone September Producer Price Index (PPI) (18:00)

Thursday: Germany September Industrial Production (15:00)
Eurozone September Retail Sales (18:00)

Friday: Germany September Imports & Exports and Trade Balance (15:00)

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