Investing.com – The fell last week, reaching a low at 1.0453 on Friday, the lowest since November 26, and returning above 1.05 this Monday morning.
However, the underlying trend is still far from positive, and this week’s busy economic calendar represents a key risk, and caution therefore remains in order.
Remember that last week, American statistics were sufficient to rule out the risk that the Fed would not lower its rates this week, but on the other hand maintained the idea that the central bank could then decide to take a break .
However, investors will have the opportunity to see things more clearly on Wednesday evening, when the Fed will undoubtedly provide clues allowing them to refine expectations for the January meeting.
Currently, the market is pricing in a nearly 80% chance that the Fed will abstain next month. If the Fed suggests on the contrary that it will lower rates further in January, we should expect a fall in the Dollar, and a rebound in EUR/USD.
If, on the contrary, the Fed shows confidence and suggests that further rate cuts will indeed not be necessary for the moment, it is the reduction which should prevail over the Euro Dollar.
Aside from the Fed meeting, other events are likely to influence the Euro Dollar this week, including PMIs on both sides of the Atlantic on Monday, as well as US retail sales tomorrow after -noon.
From a graphical point of view, the underlying downward trend which has dominated since the peaks at the end of September is still relevant.
A return above the 1.0630-70 zone would begin to challenge the underlying bearish bias. In this case, 1.07, 1.08 and the 200-day MA at 1.0832 will be the next important upside thresholds.
In case of a decline below 1.05, last Friday’s low 1.0450 will be the first potential support, before 1.04, then this year’s low point around 1.0330.
