Last week, after the U.S. Federal Reserve reduced its forecast for rate cuts next year from 4 to 2, the euro fell to 1.0343. However, the November 22 low of 1.0334 acted as a support level, and the euro stopped falling further.
This week, with most European markets closed for Christmas, trading activity will be light. This increases the risk of the euro weakening further.
At the end of last week, former President Trump urged the EU to buy oil and gas to reduce the trade deficit with the U.S. While this didn’t lead to much euro selling before the Christmas holiday, the risk of further selling remains high in the future.
Additionally, if France fails to pass its provisional budget this week, it could further increase pressure on the euro. Other factors, such as U.S. pressure, political uncertainty in Germany, and potential rate cuts by the European Central Bank, could also cause the euro to weaken more than expected, especially if it breaks below last week’s low.
This Week’s EUR/USD Forecast Range: 1.0500–1.0200
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