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EUR/USD slides slightly below 1.0800 in Wednesday’s European session. The major currency pair stays under pressure as the Euro’s (EUR) outlook has worsened due to the faster-than-expected decline in inflation and growing risks of a downturn in the Eurozone economy, which have prompted speculation for more interest-rate cuts by the European Central Bank (ECB).The ECB has already reduced its Deposit Facility Rate three times this year and is widely anticipated to cut again in the December meeting. Therefore, traders start predicting the likely destination of ECB borrowing rates, a level that should allow to keep inflation under control and also spurt growth. A few ECB officials have recently debated over whether interest rates could be lowered below the so-called neutral rate to boost economic growth and diminish inflation risks, Reuters reported. This week, Lithuanian central bank governor and ECB Governing Council member Gediminas Šimkus discussed the risk of inflation remaining too low. “If the disinflation processes get entrenched it’s possible that rates will be lower than the natural level,” Šimkus said. According to market experts, the neutral rate is around 2% or 2.25%.On Tuesday, ECB President Christine Lagarde remained confident about inflation sustainably returning to the bank’s target of 2% in the course of 2025, sooner than previously expected, she said in an interview with Bloomberg at the sidelines of the International Monetary Fund (IMF) meeting. When asked about the monetary policy outlook, Lagarde said that the direction is clear but that the pace of further interest rate cuts will depend on the incoming economic data.
Daily digest market movers: EUR/USD is under pressure due to multiple headwinds
Technical Analysis: EUR/USD declines toward 1.0750
EUR/USD tests region below 1.0800 in European trading hours. The outlook of the major currency pair remains downbeat as it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.The downside move in the shared currency pair started after a breakdown of the Double Top formation on a daily time frame near the September 11 low at around 1.1000, which resulted in a bearish reversal.The 14-day Relative Strength Index (RSI) dives below 30.00, indicating a strong bearish momentum. However, a recovery move remains on the cards as conditions turn oversold.On the downside, the major could find support near the upward-sloping trendline at 1.0750, which is plotted from the October 3 low around 1.0450. Meanwhile, the 200-day EMA and the psychological figure of 1.1000 will be the key resistance for the pair.More By This Author:AUD/USD Bounces Back From 0.6650 On Firm RBA Hawkish Bets USD/CAD Trades Sideways As BoC Policy Takes Centre Stage USD/CHF Price Forecast: Corrects To Near 0.8630 Despite Upbeat US Dollar
