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The rebound of the euro against the US dollar has encountered resistance, but there are details showing that the US dollar is still shaky!
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market www.xmltrust.commentary]: The rebound of the euro against the US dollar has encountered obstacles, but there are details that show that the US dollar is still shaky!". Hope this helps you! The original content is as follows:
On Thursday (October 9) during the Asia-European session, the Euro/USD pair (EUR/USD) went out of a wide range of fluctuations. It is currently trading above 1.1600, holding the support level of 1.1600; previously, when the European session opened on Thursday, the currency pair encountered resistance and pressure near 1.1650. Affected by the political uncertainty in France, investors remain vigilant, and the upward momentum of the euro has always been weak.
France's outgoing Prime Minister Sébastien Lecornu soothed market sentiment on Wednesday, saying President Emmanuel Macron would appoint a new prime minister within the next 48 hours and dismissing opposition calls for new elections on the grounds that there is no majority in parliament to support new elections.
In the United States, the government shutdown has entered its eighth day, and there is still no progress in negotiations to restore funding allocations; against the backdrop of the suspension of the release of key economic data, news from the Federal Reserve has become the current core fundamental driver. The minutes of the Federal Reserve's last meeting released early Thursday morning showed that the Federal Reserve faces significant challenges in fine-tuning monetary policy: the job market is weak, and inflation risks are tilted upward.
It is worth noting that, according to a report by Fortune magazine on October 7, a study by Harvard University economist Jason Furman found that the growth of U.S. gross domestic product (GDP) in the first half of 2025 will be almost entirely driven by data centers and information processing technology. In other fields other than these technologies, the U.S. growth rate is only 0.1%.
Furman is socializingResearch data published in the media show that in the first half of this year, investment in information processing equipment and software accounted for only 4% of U.S. GDP, but they accounted for 92% of GDP growth. In the first half of the year, U.S. GDP grew by an average of 1.6%. However, if fields such as data centers and information processing technology are excluded, U.S. GDP growth was only 0.1%, almost stagnant.
In the early hours of Friday, a number of Federal Reserve officials will give speeches to provide more clues to the Federal Reserve's monetary policy planning. However, in the absence of key economic data, they will most likely not change the market's existing consensus that the Federal Reserve will still implement two interest rate cuts in the remaining monetary policy meetings this year.
Market dynamics package: Improved market sentiment provides breathing space for the euro
On Thursday, market sentiment recovered slightly, providing some breathing space for the euro, but the downward trend of the euro has not been reversed. French President Emmanuel Macron is expected to appoint a new prime minister, but the new prime minister will face the same dilemma as the previous five prime ministers - solving the country's budget problems.
Germany’s trade surplus in August was 17.2 billion euros, higher than 14.2 billion euros in July, exceeding market expectations. However, the expansion of the surplus was mainly due to a 1.3% drop in imports, which offset a 0.5% decline in exports (exports were lower than expected for the second consecutive month).
Previously on Wednesday, Germany had announced that industrial output fell by 4.3% in August; the trade data and industrial output data jointly confirmed the weak economic growth momentum of Germany as the core economy of the euro zone, further suppressing the already weakening euro.
In the United States, the minutes of the Federal Reserve's September monetary policy meeting released early Thursday morning showed that policymakers are divided on the issue of "how much easing measures need to be taken to support economic growth without pushing up inflation." A dot plot included in the "Summary of Economic Forecasts" released by the Federal Reserve on September 17 showed that the vote for the proposal to cut interest rates at least two more times this year was 10 in favor and 9 against.
At the geopolitical level, Israel and Hamas have reached a ceasefire agreement. Although this agreement seems to be unstable, it has so far played a role in improving market sentiment.
Technical analysis: EURUSD remains close to the 1.1600 support level
The rebound trend of EURUSD continues to encounter selling pressure, and the short trend is maintained. The previous integer support level of 1.1650 has now been converted into a resistance level, limiting the upward space of the euro, while the 1.1600 support level is close at hand, and risks are gradually increasing. The relative strength index (RSI) remains well below 50, indicating significant bear pressure.
EUR/USD encountered resistance at the 1.1650 mark, a trend that confirms that bears still dominate the market; however, the support level near 1.1600 (may have strong support. If this support level fails, the next target will be the intersection of the low on Wednesday, August and the trend line support level) on the 22nd and 27th (near 1.1575), and further will beIt is the low of 1.1530 on August 5th - however, judging from the trend on Wednesday, the 1.1530 level is still out of reach.
The immediate resistance level of EURUSD is located in the 1.1645-1.1650 range (lows on September 25 and October 6). After breaking through this range, it will face downward trend line resistance (currently located near 1.1690). If this trend line resistance is exceeded, it may imply a trend reversal, and the market focus will then turn to last week's high 1.1765-1.1775 range.
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