EUR/USD Forecast: Bearish Momentum Dominates Amid Limited Corrections

EUR/USD Forecast: Bearish Momentum Dominates Amid Limited Corrections?

?

The EUR/USD pair rebounded modestly during today’s European trading session, recovering from a five-day losing streak. The pair climbed to a short-term resistance level of 1.0519, bouncing back from a two-week low near 1.0453 earlier in the day. Despite this recovery, the euro remains under significant pressure due to a combination of fundamental factors favoring further U.S. dollar strength.?

Factors Driving the Dollar's Strength?

Several key factors continue to support the upward trajectory of the U.S. dollar, leaving the euro vulnerable to further declines. Chief among these is the increasingly dovish stance of the European Central Bank (ECB). During its final meeting of the year, the ECB opted to maintain a cautious approach, cutting interest rates for the fourth consecutive time. ECB leaders also signaled a potential continuation of this policy into 2025, citing slowing inflation and weakening economic growth across the Eurozone.?

This policy divergence between the ECB and the Federal Reserve amplifies the downward pressure on the euro. While the Fed remains firm on its relatively hawkish stance, the ECB’s commitment to easing monetary policy creates a challenging environment for EUR/USD bulls.?

Technical Analysis: Key Levels to Watch?

Support Levels?

The EUR/USD pair continues to trade within a bearish framework, with critical support levels in focus:?

• 1.0453: Today’s and the two-week low, which could serve as a pivotal point for further bearish action.?

• 1.0335 and 1.0250: These levels align with the lower boundary of the descending channel on the weekly chart. A break below these levels could intensify bearish momentum.?

Resistance Levels?

On the flip side, resistance levels are expected to cap any upward corrections:?

• 1.0519: The current short-term resistance level.?

• 1.0600 and 1.0612: Secondary targets for a potential bullish correction.?

• 1.0670: A key level likely to limit any significant upside movement, given the prevailing bearish sentiment.?

In the longer term, the pair remains firmly below critical resistance levels of 1.0810 (medium-term) and 1.0940 (long-term), reinforcing the bearish outlook.?

Short-Term Scenarios for EUR/USD?

Bearish Continuation?

A decisive break below the psychological support level of 1.0500 would signal a renewed bearish trend. Confirmation of this breakout could come with a fall below the 1.0453 mark, paving the way for targets at 1.0335 and 1.0250. These levels correspond to the lower boundary of the broader descending channel, indicating a continuation of the long-term downtrend.?

Limited Upside Correction?

Alternatively, a break above the 1.0519 resistance level could trigger a short-lived upward correction. In this scenario, the EUR/USD pair might target 1.0600 and 1.0612, with a potential extension to 1.0670. However, these gains are expected to be temporary, as bearish momentum remains dominant.?

Market Outlook: The Bearish Bias Prevails?

Despite today’s correction, the broader outlook for the EUR/USD pair remains bearish. The euro’s struggles are compounded by the ECB’s dovish policy stance and the persistent strength of the U.S. dollar. While short-term recoveries are possible, they are unlikely to alter the pair’s downward trajectory.?

Traders should remain cautious and consider the following:?

• Short positions remain favorable as long as the pair stays below 1.0810 and 1.0940.?

• A breach of critical support levels, such as 1.0453, could accelerate bearish momentum.?

?

?

In conclusion, the EUR/USD pair continues to operate within a bear market zone, with limited room for upward corrections. The prevailing fundamental and technical factors suggest that the path of least resistance remains to the downside.?

?

Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.?