Eurusd Declines As Rate Cut Looms

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Eurusd Declines As Rate Cut Looms

Eur/Usd Declines To 1.1050 As Ecb Rate Cut Looms

EUR/USD has turned lower near the 1.1050 handle on Monday amid the improved demand for the US Dollar. Also, the market's mood is cautious which is also contributing to the recent leg lower.

Amidst all of this, the market is also expecting a rate cut from the ECB (European Central Bank) this week. So, that's yet another reason for the EUR to be under selling pressure.

Eur/Usd Chart Shows Rsi Under 70

The H4 chart of EUR/USD shows that the RSI is under 70, which is a bullish zone. So, there's a good chance that the recent selling in EUR/USD is more likely a correction as the pair was in an overbought zone.

If the EUR/USD resumes its uptrend, the next static level that will serve as resistance will be 1.1160, followed by the next one at 1.1200. A sustained move beyond these will give the bulls a chance to challenge the static level at 1.1250.

But if the recent selling pushes the pair lower, the next stop will be 100 SMA, located at 1.1100. After that, the 50 SMA will act as dynamic support, and then there will be support near 1.1040. Once all these levels are lost to the Dollar bulls, the next level to watch will be 1.1000.

However, this doesn't mean all is good with the US economy, as last Friday's NFP report was weak and cast doubts on the health of the US economy. So, that's a solid reason why we have not seen a strong US Dollar demand.

Also, the long-awaited month of September is here, when the US Federal Reserve is expected to lower its policy rate. So, while the ECB is expected to lower the interest rate, investors have similar expectations for the Federal Reserve as well.

That's why we believe that the recent rate cut from ECB will not put the EUR under that much pressure as the Federal Reserve will also pull a similar move.

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