Eurodollar Weakens as Dollar Strengthens Amid Adjusted Expectations for Fed Rate Cut【December 6, 2023】

December 06, 2023

Markets Analysis

Fundamental Analysis

  • The Eurodollar continues to fall for a second day as expectations for a U.S. rate cut are adjusted. 
  • The Eurodollar breaks below the 240-day moving average. 
  • The Eurodollar could fall further, lacking support until USD 1.072.

EURUSD Technical Analysis

Analyzing the Eurodollar’s daily chart, it has now broken below the crucial 240-day moving average, which will significantly influence future trends. If this line acts as resistance, the Eurodollar could plummet to around USD 1.072.

As the dollar strengthens amid adjustments following premature expectations for a U.S. rate cut, it’s too early to determine whether this is an opportunity to buy the dip or a shift to a downward trend. Pay close attention to the relationship between the 240-day moving average and the candlestick positions.


Day Trading Strategy (1-Hour Chart)

Analyzing the Eurodollar’s 1-hour chart, the 24-hour moving average is acting as resistance, and the currency continues to fall, setting new lows. According to Dow Theory, this is a clear downtrend. The key weekly support line of USD 1.0807 has already been breached, intensifying the downtrend. In the current market, trade with a selling perspective until it surpasses the 24-hour moving average.

For day trading, consider selling around USD 1.08, with a target of USD 1.0735. Place a stop either when it closes above the 24-hour moving average or around USD 1.0835.

Support and Resistance Lines

Upcoming resistance lines to consider:

1.080 USD – Psychological price level
1.072 USD – Previous psychological price level


Market Sentiment

EURUSD Sell: 33%, Buy: 67%

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
Australian GDP9:30
U.S. ADP Employment Report22:15
Canadian Policy Interest Rate
(Expected: Unchanged)
U.S. Crude Oil Inventories24:30

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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