105 Euro to USD: Understanding the EUR/USD Exchange Rate
The US Dollar has experienced a significant breakout, continuing for a seventh week, contrasting sharply with the weakness seen in Q3. The US Dollar Index (DXY) is nearing range resistance, having closed the gap from last November’s FOMC rate decision, a time when the Federal Reserve hinted at the end of rate hikes and the possibility of future cuts. With the EUR/USD pair at range support and the US Dollar at range resistance, the focus shifts to the two-year mean reversion theme.
The US Dollar’s strength in Q4 is notable, especially considering the weakness in the first two months of Q3 after testing the 106.00 level. The Fed’s less dovish stance has contributed to this shift. Surprisingly, the USD didn’t weaken significantly after the Fed’s initial rate cut, likely due to well-managed expectations and anticipation of further easing. The Fed’s September forecast projected Fed Funds to be around 3.1%-3.6% at the end of 2025 and 2.6%-3.6% at the end of 2026.
Despite this, sellers struggled to gain ground, leading to a falling wedge formation, often a precursor to a bullish reversal. This reversal materialized in Q4, propelling the DXY to a new yearly high. Closing the gap from last November, when the Fed signaled the end of rate hikes, was a key event. The DXY closed at 106.88 on November 1st and opened at 106.50 the following day. This gap influenced price action in April and May, forming a double top at 106.50. While this slowed the upward momentum briefly, buyers persisted, pushing the DXY to a fresh yearly high on Thursday. However, the daily DXY chart shows RSI divergence, with a lower-high on RSI and a higher-high on price, mirroring the September divergence that preceded the falling wedge.
US Dollar Daily Price Chart
The weekly chart reveals the US Dollar’s two-year range. Previous rallies, like the 11-week surge last summer and the rally earlier this year, stalled around the 106.50 level. The crucial question is whether the current bullish momentum can break through this resistance. The FOMC’s cautious stance on future rate cuts supports this possibility. Importantly, the Euro, the largest component of the DXY, faces potential further rate cuts, impacting the EUR/USD relationship and influencing the conversion rate of 105 Euro To Usd. The EUR/USD is currently testing range support. The DXY’s two-year high is at 107.35, with the 107.00 level tested twice this week, including a lower-high on Thursday following Jerome Powell’s remarks questioning the December rate cut priced into markets.
US Dollar Weekly Chart
The EUR/USD rapidly ascended to 1.1200 in August before encountering strong resistance. Now, halfway through Q4, the pair has dropped to range support at 1.0500, a level last seen a year ago. This level’s significance in relation to the DXY’s test of 107.00 is noteworthy, especially considering its potential impact on converting 105 euros to US dollars. The daily chart displays diverging RSI, rising above 30, suggesting potential lower-high resistance tests at 1.0611-1.0643, followed by 1.0700 and 1.0750-1.0765.
US Dollar Hourly Price Chart
EUR/USD Weekly Chart
The 1.0500 level holding as support, coupled with the diverging RSI on the daily chart, sets the stage for potential upward movement in the EUR/USD. This could impact the dollar equivalent of 105 euros. Key resistance levels to watch include the 1.0611-1.0643 zone, 1.0700, and 1.0750-1.0765.