The EUR/USD currency pair is experiencing significant downward pressure, with prices falling to fresh multi-month lows. As of Monday, the pair is trading below the 1.0200 mark, a level not seen since November 2022. This decline marks the fifth consecutive day of losses for the EUR/USD, driven by a combination of technical indicators and broader market dynamics. The US Dollar (USD) has surged higher, fueled by last week's Nonfarm Payrolls (NFP) report and ongoing risk-off sentiment in financial markets.
The EUR/USD pair remains well below all its moving averages, highlighting the solid bearish momentum. The 20 Simple Moving Average (SMA) is currently providing dynamic resistance at 1.0370. Meanwhile, the 100 SMA continues its downward trajectory below the 200 SMA, both situated well above the shorter-term moving average. This configuration underscores the prevailing bearish sentiment impacting the EUR/USD.
Technical indicators present a grim picture for the EUR/USD, with the Relative Strength Index (RSI) consolidating at around 24, indicative of oversold conditions. Despite this, the indicators have turned flat at these low levels, suggesting a lack of impetus for a reversal in the near term. The pair's inability to rebound highlights the sustained demand for the US Dollar amid prevailing market uncertainties.
The USD's strength can be attributed to several factors, including hawkish expectations from the Federal Reserve and policy uncertainty in the US political landscape. Investors are pricing in no rate cuts from the Fed for at least the first half of 2025, which has contributed to a selling spiral in stock markets globally. On Monday, both Asian and European markets traded in negative territory, reflecting the broader risk-off sentiment.
The EUR/USD's recent price action also signals a shift from a brief period of gains. The pair had previously snapped a four-day winning streak to reach a one-month high last Friday. However, this upward momentum was short-lived as the USD's rally gained traction, pushing the EUR/USD into its current downtrend.
Market participants are closely monitoring developments in US monetary policy and global market conditions. The absence of anticipated rate cuts from the Fed has bolstered the USD's appeal as a safe-haven currency, particularly in times of heightened uncertainty. This dynamic has placed additional pressure on the EUR/USD pair, which continues to navigate below critical support levels.