## Euro Rebound Behind the Scenes: Can the Dovish Signal from the Federal Reserve Reverse the Downtrend?

Will EUR/USD keep falling? This question has recently become the focus of market attention. During Monday's trading, the currency pair found mild support around 1.1525, closing with an increase of over 0.10%, but the shadow of a downtrend still looms—technical indicators still point downward, making the sustainability of the rebound a key suspense.

## Fed Officials Turn Dovish, Expectations of Rate Cuts in December Surge

In recent days, the Fed's policy signals have shown a clear shift. Fed Governor Waller publicly stated that a weak labor market requires further easing support in December, and New York Fed President Williams also opened the door for rate cuts. This statement triggered a chain reaction in the market—according to the latest CME FedWatch tool readings, participants now see an 80% chance of a rate cut in December, up from 31% a week ago.

The background driving this change is mixed economic data. In September, non-farm payrolls increased by 119,000, higher than the expected 50,000, but the overall labor market still shows signs of weakness. Meanwhile, the University of Michigan Consumer Sentiment Index and S&P Global Flash PMI have shown mixed performance, reinforcing traders' concerns about weakening economic growth momentum.

## Weak European Data, Euro Lacks Upward Momentum

However, the dovish stance of the Fed seems insufficient to sustain a rally in the euro. European economic data are also under pressure—Germany's IFO Business Climate Index for November fell from 88.4 to 88.1, missing expectations. ECB members and Bundesbank President Nagel recently emphasized that food inflation remains "stubborn," and strong service price increases continue to raise concerns. The current policy stance in the Eurozone remains moderate.

The US Dollar Index (DXY) remains relatively stable at around 100.16, which also limits further upside potential for the euro. Market analysts point out that trading volume during the US Thanksgiving holiday period has shrunk, possibly affecting the euro's performance. The true direction may depend on the upcoming release of key data such as PPI and retail sales this week.

## Technical Outlook Still Weak, Can the Rebound Change the Downtrend?

From a technical perspective, the EUR/USD rebound remains weak. The currency pair reached a high of 1.1550 on Monday before falling back to 1.1525. The Relative Strength Index (RSI) remains below the neutral 50 level, indicating that the downtrend has not truly reversed.

To change the scenario of continuous decline, the euro needs to break through the key resistance at 1.1550 and then challenge the 20-day simple moving average at 1.1560. Once this barrier is overcome, the next target would be around 1.1600, followed by the confluence of the 50-day and 100-day SMAs at 1.1637/1.1648. Breaking through this zone would establish genuine rebound strength, extending toward the 1.1700 level.

Conversely, if the 1.1500 support fails to hold, the euro will face the November 5 low of 1.1468, then approach the 200-day moving average near 1.1409. This would further confirm the downward pattern. This week's economic data releases—PPI, retail sales, and initial jobless claims—will be crucial in determining the euro's direction, as they could redefine market expectations for rate cuts and influence the medium-term trend of this currency pair.