EUR/USD Struggles as Geopolitical Risks Overshadow Fed Cut Odds

EUR/USD Struggles as Geopolitical Risks Overshadow Fed Cut Odds

EUR/USD failed to capitalize on rising Fed rate-cut probabilities, trading near flat Tuesday as geopolitical tensions and French political uncertainty weighed on the pair. Despite Fed Governor Waller's dovish comments increasing the likelihood of a December rate cut, broader uncertainties drove demand for safe-haven assets like the U.S. dollar. South Korea's declaration of martial law and concerns over French political instability overshadowed tightening German-U.S. yield spreads, limiting euro gains. Additionally, President-elect Trump's tariff threats added a layer of risk, sidelining EUR/USD bulls.

Technical Signals

Technical signals remain mixed, with daily RSI rising but monthly RSI falling, reflecting longer-term bearish momentum. A potential head-and-shoulders bottom pattern suggests a recovery attempt, but EUR/USD remains below structural resistance near 1.0600 and the 21-DMA. The inability to clear these levels highlights continued downside risks. Key support lies at Tuesday’s low near 1.0492, while resistance is at the 21-DMA and 1.0600. A break below 1.0490 could invite further selling toward long-term support near 1.0450.

Upcoming U.S. Data Risks

Upcoming U.S. data risks loom, including November ADP and payrolls reports, which will shape expectations for the Fed's rate path. Strong data could reinforce dollar strength and push EUR/USD lower, with a focus on factory orders and ISM non-manufacturing PMI as additional catalysts. Until uncertainties subside, EUR/USD may struggle to gain upward traction, leaving bears in control.