Euro Weakens On Holiday Market Coil, Strong Dollar

Fundamental Analysis

* Dollar Dominant: The Euro continued to decline against the dollar during the Asian session as trading volumes remained light, with markets gradually recovering from the New Year holiday. The Euro struggled to find buyers due to robust U.S dollar which was bolstered by a less dovish Federal Reserve. The U.S central bank may take a more cautious stance on potential rate cuts in 2025, indicating a shift in its monetary policy strategy. This shift comes amid uncertainties surrounding the economic policies expected under the upcoming Trump administration. Furthermore, Donald Trump’s victory has significantly fueled the dollar’s strength, with political, financial, and monetary implications of his second term influencing market sentiment, even before his official inauguration.

Technical Analysis

*Technical Breakout: EURUSD was traded lower while currently testing the support level 1.03450. MACD which illustrate bearish bias signal with the formation of death cross suggest the pair to likely extend its losses after it breach below the level.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.02250 after it breach below the level 1.03450. Conversely, a potential reversal is also to be expected and the price could head back towards 1.04600.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

With a relatively quiet economic calendar, market sentiment is likely to be the key driver of activity. Nonetheless, U.S. data, including Initial Jobless Claims and ISM Manufacturing PMI, may inject some momentum into the markets.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Eurozone data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.