• EUR/USD attracts fresh buyers on Friday as the USD remains depressed near a multi-week low.
  • The recent fall in US bond yields and bets that the Fed will hold rates steady weigh on the USD.
  • Geopolitical risks could limit USD losses, while France’s debt crisis could cap gains for the Euro.

The EUR/USD pair builds on the overnight bounce from sub-1.1200 levels and attracts some follow-through buying during the Asian session on Friday. Spot prices, however, remain confined within a one-week-old range, currently trading around the 1.1225 area amid mixed fundamental cues.

As investors move out of Artificial Intelligence (AI) and tech stocks into safe-haven government bonds, the yield on the benchmark US Treasury fell to its lowest level in over a month and below the 5% threshold. Furthermore, US Federal Reserve (Fed) officials recently signaled that there is no urgency to raise interest rates. This, in turn, keeps the US Dollar (USD) depressed near a three-week low, touched on Thursday, and turns out to be a key factor offering some support to the EUR/USD pair.

Meanwhile, US inflation figures, released last week, reaffirmed market bets for an imminent Fed rate hike. In fact, CME Group's FedWatch Tool indicates that traders are pricing in around an 80% chance that the US central bank will raise borrowing costs in December. Moreover, inflation fears stemming from volatile oil prices underpin prospects for further policy tightening by the Fed, which, along with Middle East jitters, could help limit further losses for the safe-haven Greenback.

In the latest developments, Iran’s Islamic Revolutionary Guard Corps (IRGC) said that fresh attacks by the US could prompt Tehran to invade neighbouring countries and hit bases used in US military operations as part of its new offensive strategy. This comes on top of a report that the US and Israel have drawn up detailed plans for renewed strikes against Iran, which keeps the geopolitical risk premium firmly in play and might hold back USD bears from placing fresh bets.

Furthermore, a deep sovereign debt and political crisis in France might continue to undermine the shared currency and cap the EUR/USD pair. Traders now look forward to flash PMIs from the Eurozone and the US for some meaningful impetus. The focus, however, will be on the outcome of a two-day FOMC meeting, starting next Tuesday, and the release of important US macro data – the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

EUR/USD daily chart

Technical Analysis

The EUR/USD pair keeps a bearish near-term bias below the 50-day Simple Moving Average (SMA) at 1.1437 and all key Fibonacci retracement levels derived from the 1.1116–1.1710 upswing. Meanwhile, immediate resistance emerges at the 23.6% Fibo. retracement at 1.1256, followed by a dense cluster of levels between the 38.2% retracement at 1.1343 and the 50.0% retracement at 1.1413, reinforced by the 50-day SMA at 1.1437.

Further up, the 61.8% level at 1.1483 and the 78.6% retracement at 1.1583 precede the cycle high at 1.1710. On the downside, the only nearby structural support is the Fibonacci anchor at 1.1116, where buyers could attempt to slow the decline if the EUR/USD pair extends its slide.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Euro.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.