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Key points
The EUR/USD pair started December on a bearish note, closing at a lower 1.0489 overnight. The French government’s current grappling with a budget deadlock and broader eurozone struggles is further compounding the pair’s weak stance within the G10 currency space.
Picture: EUR/USD edges lower amid bearish momentum, testing key support levels, as seen on the VT Markets app.
From the charts, we see the key technical indicators suggesting further downward pressure, with the pair holding key resistance at 1.050. Analysts expect the pair to test key support at 1.046 on the back of upcoming US Fed policies and a rising dollar.
Traders should watch for a breakout below 1.04600 or a reversal above 1.05015 to determine the next major move.
Market participants are bracing for a downside risk if France’s government impasse continues.
Looking stateside, improved manufacturing data has further boosted the dollar’s strength. The Federal Reserve’s hawkish stance has only widened the chasm between both regions’ economic trajectories, though its sustainability remains to be seen.
All eyes are now turning to Friday’s US employment data to clue in on the Fed’s rate path for 2025.
President-elect Donald Trump’s tariff threats remain a heavy cloud on the EURUSD. Countries looking to oppose the dollar’s status as a reserve currency may be heading into choppy waters as the new year draws closer.
The market anticipates that the dollar may hold its strength under the Trump administration, supported by trade measures rather than monetary easing.
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