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Oversold RSI and Key Support Point to Trend Reversal
Central Bank
Economic
Summary:
If this support zone is successfully defended, the price could renew its upward impulse to attempt a break toward a new local high.
Buy
PENDINGEURUSD
EXP
1.15000
Entry Price
1.16450
TP
1.14600
SL
1.15249 +0.00043 +0.04%
--
Point
PENDING
1.14600
SL
CLOSING
1.15000
Entry Price
1.16450
TP
The European Central Bank (ECB) and Deutsche Bundesbank President, Joachim Nagel, spoke at the Frankfurter Impulse event on Monday. While acknowledging that food inflation remains persistent, Nagel stated that the Euro's current level around $1.16 is not a cause for concern. Separately, German IFO business sentiment figures were largely in line with expectations, showing little change from the previous month. The primary market highlight for the Eurozone this week will be the preliminary German CPI inflation figures scheduled for release on Friday. Earlier data from the Eurozone's PMI reports revealed that manufacturing activity contracted against expectations, while the services sector showed signs of slowing down.
Federal Reserve Governor Christopher Waller publicly supported a rate cut in December but admitted that a move in January is less certain. In an interview with Fox Business, Waller noted, "The bulk of the private sector and the anecdotal data we’ve received indicate that nothing has really changed. The labor market is weak; it continues to weaken."
Meanwhile, San Francisco Fed President and Fed Governor Mary Daly, speaking to the Wall Street Journal on Monday, maintained her belief that the Fed can successfully guide inflation back to its 2% target. Daly suggested that the risk of an inflationary flare-up is diminished, given that cost increases driven by tariffs have been more moderate than anticipated earlier this year. Adding to the increasingly dovish chorus, New York Fed President John Williams stated last Friday that the Fed could still cut rates in the "near term," significantly boosting the implied probability of action in December.
Last week's U.S. economic data provided mixed signals but suggested underlying resilience. September's Non-Farm Payrolls (NFP) increased by 119,000, comfortably beating expectations of a 50,000 rise. However, the August reading was revised sharply downward, showing a loss of 4,000 jobs instead of the previously reported gain of 22,000. The Unemployment Rate rose to 4.4%, hitting its highest level in four years. Wage growth showed moderation, with Average Hourly Earnings rising 0.2% month-over-month (MoM) in September, falling slightly short of expectations. Despite the Federal Open Market Committee (FOMC) being openly divided, the collective commentary from key Fed officials has increased the likelihood of the central bank reducing borrowing costs at the December 9-10 meeting.
Technical Analysis
The EUR/USD pair has been under consistent bearish pressure but has recently failed to establish a new lower low, finding crucial support at the 1.1504 level. If this support zone is successfully defended, the price could renew its upward impulse to attempt a break toward a new local high. Such a move would signal that bearish sentiment may be dissipating, opening the way for a possible trend change.
Adding weight to the bullish case, the Relative Strength Index (RSI) has dropped to 28, clearly entering oversold territory. This level is highly likely to attract buying interest from investors looking to enter long positions. The 100-period and 200-period Moving Averages (MAs) on the 4-hour chart are positioned at 1.1553 and 1.1587, respectively. A convincing close above both these MAs would accelerate the upward momentum. The next significant resistance level stands at 1.1645. A rally toward this objective would likely involve the price breaking above the prevailing bearish trendline, potentially altering the long-term outlook for EUR/USD. However, if the price continues to fall and prints a new lower low below 1.1504, the current bullish setup would be invalidated, signaling that bears remain firmly in control.
Trading Recommendations
Trading direction: Buy
Entry price: 1.1500
Target price: 1.1645
Stop loss: 1.1460
Validity: Dec 03, 2025 15:00:00
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