At the start of the Tokyo market this week, U.S. long-term interest rates rose, causing the euro to drop to the low 1.05 range.
Weak November manufacturing PMI results from several European countries and political uncertainty in France led to more euro selling. In the New York market, the dollar strengthened further. Strong U.S. PMI data and an ISM manufacturing index that exceeded expectations drove dollar buying, which pushed the euro down further to 1.0461.
Near the close of the New York market, Federal Reserve Board member Waller expressed support for a rate cut in December, which lifted the euro back to the 1.05 range. However, it struggled to rise higher.
Concerns about political instability in France, following Germany, and expectations of larger interest rate cuts by the European Central Bank (ECB) compared to the Federal Reserve are putting downward pressure on the euro.
With thin trading, prices are more likely to move in one direction. The euro has turned downward near the 1.06 level, which looks like a possible double top. The key level to watch is the neckline at 1.0334.
Predicted Euro-Dollar Range: 1.0540–1.0430
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