The euro exchange rate to the US dollar is currently showing remarkable stability and sticking to a persistent downtrend, unaffected by external events. The euro is facing a difficult economic environment. There is also a series of lower highs on the charts, as well as a deteriorating macroeconomic outlook compared to the United States. The absence of a steady source of energy resources and conflicts in neighbouring regions, including ongoing conflicts in the Middle East and potential events further south, have added to the euro rate’s low levels. By comparison, the American dollar is showing strength not only for the economy but it is also acting as a safe-haven currency.
EUR/USD’s recent attempt to break to the upside was quite temporary, as some traders would buy euros for a short time. It was pushed back into its continuing downtrend due to escalations in the Israel-Hamas conflict. This strengthens the notion that selling on rallies remains a viable strategy for this currency pair.
Euro-Dollar Rate Dynamics
For those considering short positions on EUR/USD, it may be wise to set defensive stop orders above the resistance downwards. This is currently around 1.058. Willing buyers have appeared for the currency pair around 1.0480 in the past two weeks. This makes it a possible first target for shorting. If the downtrend continues, the next downside levels to watch are 1.045 and 1.0360. The first is the low from early October. Conversely, a decisive collapse for the downtrend could pave the way for a potential rebound. This may go up near 1.0635, and the highs we saw following the report on American inflation.
In the near term, the price action in the euro exchange rate to the dollar will feel an influence. This will be firstly through headlines in relation to Israel’s conflict with Gaza. Other economic data, such as economic data on Germany and the US, will take a backseat in terms of relevance.
