EUR/USD remains steady at approximately 1.1741 on Friday, showing little movement, as a series of Federal Reserve officials make statements, following the 25 basis points rate cut announced last Wednesday. Federal Reserve representatives emphasize worries about inflation, solidifying a cautious approach following the rate reduction on Wednesday. The attention of the market shifts towards postponed US data, while policymakers justify their divergent decision made in December. Eurozone inflation presents a mixed picture; however, technical indicators suggest potential for further EUR/USD appreciation should the 1.1762 level be breached.
EUR/USD showed an upward movement even as hawkish remarks from the Fed moderated dovish anticipations: Despite cutting rates, the Fed indicated a pause in its easing cycle, entering a wait-and-see phase as it assesses delayed economic data resulting from the US government shutdown. Meanwhile, Cleveland Fed’s Beth Hammack expressed a hawkish stance, stating that “price pressures have been too high,” while emphasizing the Fed’s dedication to reaching its 2% inflation target. She noted that the Fed’s decision was intricate and that the policy is approximately at a neutral stance.
Simultaneously Austan Goolsbee defended his stance by asserting the need to await further information, especially regarding inflation. He remarked that postponing rate cuts until Q1 2026 would enable the Fed to confirm that inflation is on a downward trajectory. Kansas City Fed’s Jeffrey Schmid expressed his dissent regarding the rate cut, noting that there has been little change in the economy since October, the time of his previous dissent. Schmid noted that he is receiving feedback regarding inflation from constituents in the district. Philadelphia Fed’s Anna Paulson expressed that she does not anticipate tariffs leading to significant price hikes, emphasizing her greater concern regarding job risks over inflationary pressures.
In Europe, Germany’s Harmonized Index of Consumer Prices, the inflation measure utilized by the European Central Bank, experienced a decline of 0.5% month-over-month in November, as anticipated, consistent with the figures from October. On an annual basis, it held steady at 2.6%, as projected by analysts. In Spain, the HICP for the same period increased by 3.2% YoY, surpassing estimates and the previous month’s 3.1% figure. Considering the fundamental backdrop, the ERU/USD technical picture indicates a neutral to upward bias, which may be reinforced if the pair concludes the week above 1.1700. The Relative Strength Index indicates that buyers are accumulating strength, suggesting potential for additional upward movement. If EUR/USD surpasses the December 11 high of 1.1762, the subsequent resistance level would be 1.1800, followed by the 1.1850 region, leading up to the yearly peak of 1.1918. On the other hand, should the pair decline beneath 1.1700, the initial support level would be the 100-day SMA at 1.1641, followed by 1.1600.