EUR/USD trims some gains with the US Dollar picking up from lows

• The Euro finds resistance above 1.1600 and retreats to the 1.1585 area.
• The US Dollar ticked up from lows but maintains its broader bearish tone intact.
• Growing hopes of Fed interest rate cuts are likely to keep USD rallies limited.

EUR/USD is pulling back from highs above 1.1600, but keeps most of its weekly gains, trading at 1.1585 at the time of writing on Thursday. Growing confidence that the Federal Reserve will ease its monetary policy further over the coming months is weighing on the US Dollar, while hopes of a peace deal between Russia and Ukraine have supported the common currency this week.

Economic data released on Wednesday revealed a larger-than-expected increase in US Durable Goods Orders and a decline in weekly Initial Jobless Claims, but that did not alter the view that the US central bank will cut rates by 25 basis points after their December meeting.

Beyond that, rumours that White House National Economic Council Director Kevin Hassett – an open dove – will replace Jerome Powell as Fed Chair after the end of his term in May, cement hopes that the bank will cut rates at least two or three more times in 2026.

Trading volumes are expected to remain subdued on Thursday, with US markets closed for the Thanksgiving bank holiday. During the European session, however, the Eurozone's Consumer Confidence index and the minutes of the European Central Bank's latest monetary policy meeting might provide some guidance for the Euro (EUR).

Monetary policy divergence is weighing on the US Dollar

• While most of the world's major central banks are at the end of their easing cycles, the Fed is widely expected to cut interest rates by at least a full point in the next 12 months. Unless this context changes radically, prospects of a lower yield are likely to weigh heavily on speculative demand for the US Dollar.
• On the macroeconomic front, December's German GfK Consumer Confidence Survey has shown a moderate improvement to -23.2, from -24.1 in November. The impact on the Euro, however, has been marginal.
• On Wednesday, US Durable Goods Orders data showed a 0.5% growth in September, following an upwardly revised 3% growth in August, and beating expectations of a 0.3% increase. Excluding transportation, orders for all other products grew 0.6%, higher than the 0.2% market consensus.
• Apart from that, weekly US Initial Jobless Claims declined to a seven-month low of 216,000 in the week of November 22, from 222,000 in the previous week, against expectations of a moderate increase to 225,000 claims.
• The focus on Thursday will be on the Eurozone's final Consumer Confidence Index, which is expected to confirm a -14.2 reading in November, unchanged from October.
• Later in the day, the ECB will release the minutes of its October 30 monetary policy meeting, when the central bank's committee agreed to keep its benchmark interest rate unchanged at the 2.0% level.

Technical Analysis: EUR/USD met resistance above 1.1600

The EUR/USD pair is on a bullish trend from the 1.1500 area, but the top of the descending channel from early October highs, now around 1.1620, is likely to pose a significant resistance for Euro bulls.

Technical indicators are positive, the 4-hour Relative Strength Index (RSI) is trading near the 60 level, and the Moving Average Convergence Divergence (MACD) keeps trending higher above the zero line. Bulls, however, will have to breach trendline resistance above the mentioned 1.1620 to confirm a trend shift and aim towards the October 28 and 29 highs, near 1.1670, and the October 17 high, near 1.1730.

On the downside, immediate support is at the previous resistance level of 1.1550 (around November 21 and 24 highs). Further down, the 1.1500 psychological level and the November 5 lows, near 1.1470, will provide support before the channel bottom, now around 1.1420.