EUR/USD Extends Losing Streak as Fed Hawkish Bets, AI Investment Flows, and Geopolitical Tensions Prop Up the Dollar

The EUR/USD pair extended its downward trajectory on Tuesday, trading near 1.1170 as investors gear up for a pivotal week packed with key macroeconomic releases and the highly anticipated Federal Reserve monetary policy decision.

Market participants are currently pricing a 90% probability that the Federal Reserve will leave interest rates unchanged at the upcoming meeting, while the likelihood of a December rate hike remains elevated at approximately 82%. Further guidance on the central bank’s policy trajectory is expected to emerge from upcoming US GDP figures and the core PCE inflation index.

The greenback has also drawn support from a resurgence of investor interest in the artificial intelligence sector, bolstered by Anthropic’s filing for an initial public offering. Robust capital investment in this high-growth technology space is viewed as a key catalyst for US economic expansion, drawing strong domestic and international capital flows.

On the geopolitical front, the US dollar continues to benefit from safe-haven demand. Escalating concerns regarding potential US military action on Iran following the midterm elections are driving demand for the currency as a traditional risk-off hedge during periods of global uncertainty.

Technical Analysis

Looking at the four-hour EUR/USD chart, the market completed the next leg of the downward wave around 1.1162, with a temporary consolidation range forming just above this level. The overarching trend remains bearish, as the price action holds firmly below key resistance at 1.1223 and the upper boundary of the correction channel. The decline is projected to extend toward 1.1152, paving the way for the next downward impulse toward 1.1133, with the ultimate bearish target situated at 1.1034. The MACD indicator corroborates this bearish outlook, with its histogram dipping into negative territory and its signal line pointing downwards. For a shift in the short-term structure to occur, the price would need to close decisively above the 1.1195 threshold.

On the hourly EUR/USD chart, the market completed its local correction near resistance at 1.1197, establishing a sequence of lower highs. A fresh downward leg is currently in development, with intermediate consolidation observed around 1.1165. For today, a decline toward support at 1.1157 is anticipated; a decisive break below this level would clear the path toward 1.1122 and subsequently 1.1100. Once these intermediate targets are reached, a minor technical correction toward 1.1174 may occur before the broader downtrend resumes. The Stochastic oscillator hovers near its 50 centerline, with its signal line turning downwards, suggesting an increase in selling momentum. The primary scenario remains the continuation of the downward wave within the four-hour structure. A break above 1.1182 would temporarily weaken the bearish momentum and could trigger a more substantial corrective phase.

Conclusion

In summary, EUR/USD remains firmly in negative territory, extending its losing streak to a fourth consecutive session. The US dollar continues to draw strength from a confluence of hawkish Federal Reserve rate expectations, robust AI-driven capital inflows following Anthropic’s IPO filing, and persistent geopolitical risks. While markets anticipate a 90% chance of unchanged rates this week, an 82% probability of a December hike keeps the dollar supported, with key US GDP and PCE inflation data set to shape future outlooks. Technically, the pair remains bearish below key resistance at 1.1223, with downside targets at 1.1152, 1.1133, and 1.1034. Although a brief corrective bounce is possible due to oversold conditions, the broader bearish trend remains robust unless price action closes above 1.1195.

Source link