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With many US investors still out after being off for Thanksgiving yesterday, the key theme that has emerged in the last few days is the easing of tariff fears. This came after President-elect Donald Trump said his “wonderful” phone call with Claudia Sheinbaum resulted in with the Mexican President agreeing “to stop migration through Mexico.” Other currencies that had come under pressure of late including the euro, rebounded. However, we will maintain our bearish EUR/USD forecast for the time being. This pair remains rooted in a bear trend, not just because of the threats of tariffs in 2025, but more so because of weakness in the eurozone economy and therefore the potential for more ECB rate cuts than from the Fed in the US, where even a December rate cut is not fully priced in, let alone cuts in 2025, after Trump’s election victory. Additionally, political turmoil in France and looming election in Germany are additional factors that will probably hold the single currency back. Insofar as today’s session is concerned, month-end flows into the US dollar may prevent it from weakening further, potentially keeping the EUR/USD below the pivotal 1.06 resistance level.
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