EUR/USD fell for a fourth consecutive day as the dollar drew support from Fed rate expectations, AI-related investment and geopolitical tension. Technically, the pair stays bearish below resistance at 1.1223.
EUR/USD fell to 1.1170 on Tuesday, its fourth consecutive day of decline. Investors are bracing for a busy week of macroeconomic data and the Federal Reserve's upcoming monetary policy decision.
Markets price in a 90% chance that rates will remain unchanged at the current meeting. The odds of a December rate hike, however, remain high at around 82%.
AI interest and Iran fears back the dollar
Additional signals on the Fed's policy outlook will come from US GDP data and the PCE inflation index. Meanwhile, renewed interest in artificial intelligence following Anthropic's IPO filing is also supporting the dollar. Strong investment demand in the AI sector is seen as a factor supporting US economic growth and capital flows into the US.
Geopolitics adds to the support. Fears that the US could resume strikes on Iran after the midterm elections are lifting demand for the US currency as a safe-haven asset.
Technical picture stays bearish
On the four-hour chart, the market completed the next leg of the downward wave around 1.1162, and a consolidation range is forming above that level. The price holds below key resistance at 1.1223. The decline towards 1.1152 is expected to continue, with scope for the next impulse towards 1.1133 and then the main target at 1.1034.
On the hourly chart, the pair formed a sequence of lower highs after a local correction near resistance at 1.1197. A decline towards support at 1.1157 is expected today, and a break below it would open the way towards 1.1122 and then 1.1100.
A short-term corrective bounce is possible given oversold conditions. The broader downtrend remains intact unless the price closes above 1.1195.
Source: ActionForex
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