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The EUR/USD registers back-to-back bullish days boosted by speculation that the Federal Reserve might cut rates at the December meeting, following the release of a strong jobs report. At the time of writing, the pair trades at 1.1595, up 0.22% after bouncing off daily lows of 1.1547.

Euro extends gains for a second day as easing expectations stay elevated despite solid US data and mixed Fed commentary

Economic data in the US continues to flow yet dovish comments by Fed officials are driving EUR/USD’s price action. The number of Americans filling for jobless insurance decreased compared to the November’s 14 print, reaffirmation of the low-firing low-hiring environment, expressed by several Fed policymakers.

Other data revealed that Durable Goods Orders for September exceeded forecasts but trailed August’s numbers.

Following the data release, the CME FedWatch Tool shows that odds for a 25 basis points (bps) rate cut at the December meeting are steady at 85%.

According to Bloomberg, JP Morgan flipped their forecast about the Fed’s upcoming meeting, and they expect a rate cut in December.

In the Eurozone, European Central Bank (ECB) officials crossed the newswires. The Vice-President Luis de Guindos said that the current level of rates is the correct one. Boris Vujcic said that “For another cut, you would have to see the inflation path going down.”

The ECB Chief Economist Philip Lane said that to keep inflation at target, “we need to see more deceleration in non-energy inflation.” Money markets expect the ECB to hold rates unchanged for the rest of the year.

Daily market movers: Euro boosted by Fed dovish expectations

• The US Dollar Index (DXY). which tracks the buck’s performance versus six currencies, dives 0.21% down to 99.57.
• Initial Jobless Claims for the week ending November 21 fell to 216,000, below expectations of 225,000 and down from the prior 222,000 print. Continuing Claims ticked higher to 1.96 million for the week ending November 14, up from 1.95 million.
• Durable Goods Orders slowed sharply in September, rising 0.5% month-over-month after August’s 2.9% surge, though the figure still beat the 0.3% consensus. Excluding transportation and defense, core orders jumped 0.9% MoM, far exceeding expectations of 0.2%.
• The euro extended gains as US data signaled easing inflation, softer consumer spending, and rising pessimism among households regarding the labor market, income prospects, and overall financial conditions.

Technical Outlook: EUR/USD clears 20-day SMA, eyes on 1.1600

The EUR/USD continues to trade sideways with buyers unable to decisively crack the 1.1600 figure. Although momentum remains bullish as depicted by the Relative Strength Index (RSI) it has turned flattish an indication that further consolidation lies ahead.

If EUR/USD breaks 1.1600, buyers will face stir resistance at the confluence of the 50- and 100-day SMAs at 1.1631/1.1646 ahead of 1.1700. Conversely, if the shared currency slides below 1.1550, the next area of demand would be 1.1500. On further weakness the next support would be the

EUR/USD resumed its uptrend, clearing the 20-day Simple Moving Average (SMA) at 1.1556, yet it remains shy of extending its gains. If the pair clears 1.1600 would face key resistance like the confluence of the be the November 5 low at 1.1468 and the 200-day SMA near 1.1426.

(Click on image to enlarge)

EUR/USD daily chart

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