The EC foreign exchange euro exchange rate is strong, and the Federal Reserve's interest rate cut expectations continue to weigh on the dollar

according toEC ForexAccording to market data, the euro/dollar strengthened for the fourth consecutive trading day. On Friday, the European market fluctuated upward, basically holding above the 1.17 mark, rising by about 0.18%. At one point, it hit a one-week high of 1.1727, which is expected to record its best weekly performance in three months. The market's concerns about the international trade situation and the expectation that the Federal Reserve may continue to cut interest rates in the future continued to weigh on the trend of the dollar; while in the European market, investors focused on the final data of the harmonized consumer price index in September.

Trade tensions continued to weigh on market nerves amid reports that the US was facing tough trade conditions. Federal Reserve officials voiced support for further interest rate cuts, while another key figure reiterated the need for looser monetary policy. The comments echoed warnings in the Fed's Beige Book about the economic outlook, strengthening expectations of consecutive rate cuts in the coming months, weighing on the dollar.

Eurozone HICP data will feature prominently on Friday's economic calendar, expected to confirm the acceleration of inflationary pressures in September, ahead of a speech by a Fed official later on Friday when the Federal Reserve releases its report on industrial production.

Trade tensions, Federal Reserve interest rate cuts and fiscal uncertainty weigh on the dollar

The dollar is on track for its worst weekly performance in months, weighed down by a combination of continued trade tensions, stronger signals that the Federal Reserve may cut interest rates several times in the coming months, and heightened market uncertainty over the government's budget standoff.

Pressure on the dollar intensified with the release of the Fed's Beige Book earlier this week, which warned of the risks of an economic slowdown as consumer spending showed signs of weakness, the labour market stagnated and businesses expressed concerns about the uncertain economic outlook and the impact of tariffs.

Market focus has now shifted to the final eurozone HICP reading, which is expected to confirm that consumer price inflation accelerated to 2.2% year-on-year in September from 2% in August, while core inflation is expected to remain steady at 2.3%.

On the part of the European Central Bank, officials said the likelihood of further rate cuts was decreasing, while another official made it clear that the central bank was at the end or very close to the end of the rate-cutting cycle.

The easing of political uncertainty in France provided additional support for the euro, although the government still faces challenges in passing the budget.

Technical analysis: EUR/USD may encounter resistance near 1.1730

According to the EC FX technical analysis, the EUR/USD strengthened for the fourth consecutive day and is expected to record its best weekly performance since mid-July. The current price trend is about to touch the double-bottom pattern target level of 1.1730, while the 4-hour chart relative strength index (RSI) enters the overbought area, indicating that the exchange rate may usher in technical consolidation or even partial profit taking.

On the upside, if the aforementioned resistance level of 1.1730 is effectively broken, the upward channel will point to the high of 1.1780 on October 1; further upward targets will look towards the high of 1.1820 on September 23.

On the downside, if there is a correction after the recent consecutive gains, the reverse trend line support (now near 1.1665) may be tested. After falling here, Thursday's low of 1.1640, the integer mark of 1.1600 and the low of October 14 near 1.1545 will become lower support in turn.

(EUR/USD 4-hour chart, source: Internet)

At 16:14 Beijing time, the euro was trading at 1.1706/07 against the dollar.