The US dollar is gaining strength, with EUR/USD falling to 1.1589. Traders should be cautious of risks.

Safe-Haven Sentiment Boosts the US Dollar, Euro Remains Under Pressure

This week’s trading environment has shifted noticeably to a conservative tone, with the US Dollar Index (DXY) rising 0.20% to 99.47, becoming the main beneficiary in the market. The inflow of safe-haven funds is primarily driven by two factors: first, the US government has released a series of significant economic data—Thursday’s non-farm payroll report and Friday’s actual income data will be focal points; second, concerns about valuation bubbles in the artificial intelligence sector are intensifying, with NVIDIA scheduled to announce earnings on Wednesday, causing widespread investor nervousness.

In this environment, EUR/USD declined 0.30 during North American trading hours, falling from an intraday high of 1.1624 to 1.1589. The exchange rate is currently seeking support near the 50-day simple moving average, but downward pressure remains evident.

Fed Stance Implies Steady Rates, Market Expectations Shift

Subtle changes have appeared in the currency market pricing. Fed Vice Chair Philip Jefferson delivered somewhat dovish remarks on Monday, suggesting that inflation risks may have diminished, but downside risks in the labor market have increased, and characterized the current policy as “somewhat restrictive.” Meanwhile, Fed Governor Christopher Waller supports continuing the easing cycle at the December meeting, citing a soft labor market as a reason to cut rates.

However, the latest CME FedWatch data shows a 57% probability of holding rates steady at the December meeting, with only a 43% chance of a 25 bps rate cut. This hawkish shift in expectations has directly supported the US dollar’s rebound.

Manufacturing Data Mixed, ECB Maintains Caution

The New York Fed’s November Empire State Manufacturing Index shows mixed signals. Current business conditions are stronger than expected, with increases in new orders and employment, and declining input prices—these are positive factors. However, the six-month business outlook index plummeted from 30.3 to 19.1, reflecting a significant decline in traders’ confidence in the outlook.

European Central Bank Vice President Luis de Guindos stated that inflation in the eurozone is converging toward the ECB’s 2% target, but also warned that rising tariffs and high sovereign debt levels pose notable risks, and any geopolitical shocks could trigger sharp shifts in market sentiment.

Technical Analysis: 1.1550 as a Key Support Level

From a technical perspective, EUR/USD shows a clear bearish trend, with sellers in control. The Relative Strength Index (RSI) is forming a U-shaped reversal downward, indicating increasing bearish momentum. A clear break below 1.1550 would further open the downside space toward 1.1500.

Conversely, for buyers to regain ground, they need to push the exchange rate back above 1.1600. Once stabilized, the next targets are the 50-day SMA at 1.1656, the 100-day SMA at 1.1659, followed by the round number 1.1700.

Trading Recommendations and Risk Management

For traders, the current environment of increased volatility requires more precise risk control. If trading options or other derivatives, it is essential to use options seller margin calculators to accurately assess position size and risk exposure, ensuring leverage remains within manageable limits. The non-farm payroll report on Thursday could trigger rapid swings of 150-200 points, so it is advisable to evaluate existing positions and set appropriate stop-loss and take-profit levels before key data releases.

In the short term, the US dollar’s bullish trend is unlikely to reverse, and the euro faces further pressure. Traders should closely monitor the 1.1550 psychological level—if it is broken, a larger decline could ensue.