EURUSD Forecast: US Election and FOMC Week

Key Events

Eurozone Flash CPI: Climbed from 1.7% to 2%, hitting the ECB’s target
US Core PCE: Increased to 0.3% for the first time since April 2024, supporting a more cautious rate cut approach
US Elections: A Trump victory raises concerns over a stronger dollar and inflation risks
FOMC Rate Cut: Markets anticipate a 25-bps rate cut for Thursday’s meeting

Eurozone Inflation and Growth Data Recap

Recent Eurozone data supported a rebound in EURUSD above 1.08, driven by positive figures in preliminary Euro GDP, which reached a one-year high of 0.4%, and a boost in German CPI to a seven-month high at 0.4%.

The flash CPI estimate also rose to the ECB’s target of 2%, up from 1.7%. These indicators have recharged EURUSD’s momentum from oversold levels, allowing it to retest the 1.09 mark. This rally, however, will be tested by US election results in a close race and the FOMC decision with a potential 25bps rate cut.

US Elections and FOMC: Potential Volatility for the US Dollar

The general market consensus is leaning toward a bullish dollar reaction (bearish EURUSD) with a Trump win in comparison to a Harris win, due to concerns over his aggressive tariff policies and inflation implications. Beyond the election, the Fed’s Thursday meeting will provide insights into economic conditions, especially after the recent uptick in Core PCE to 0.3% for the first time since April 2024 and a significant drop in US non-farm payrolls to 2021 lows, affected by a challenging hurricane season.

Quantifying Uncertainty with Technical Analysis

EURUSD Forecast: 3Day Time Frame – Log Scale

Source: Tradingview

Retesting the thrust (triangle border convergence point) of the triangle extending between the highs EURUSD recently rebounded to 1.09, retesting the triangle convergence point between the July 2023 highs and June 2024 lows.

The current price action on a 3-day chart remains above the 50-period SMA, with potential resistance at the 1.0920 area. Given the volatility risks this week, scenarios are as follows:

Bullish Scenario

Short-term resistance: 1.0920, 1.10, 1.1140

Long-term resistance: 1.1220, 1.1320

Bearish Scenario

Short-term support: 1.0830, 1.0780

Long-term support: 1.0680, 1.06, 1.05

— Written by Razan Hilal, CMT – on X: @Rh_waves

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.