EUR/USD Strategy - Political Fragmentation Limits Euro's Decline

Fundamental Analysis:

Recently, German Chancellor Olaf Scholz lost the parliamentary vote of confidence, paving the way for early elections in Germany in February. However, the euro was not significantly affected by this negative development, mainly because the fragmented coalition government is expected to end. Additionally, high market expectations for a December rate cut by the Federal Reserve have supported the euro's performance.

Looking ahead, no single party in Germany is likely to win an absolute majority, meaning coalition negotiations will likely persist. Moreover, the Eurozone faces political and trade risks in the future. As such, the euro's short-term rebound should be approached cautiously.

Technical Analysis:
On the EUR/USD 1-hour chart, the price is moving higher with relatively higher highs and lows, indicating increasing buying strength. If the price pulls back and holds above previous support levels, it will help maintain the recovery trend. Short-term long positions are recommended.

Trading Recommendation:

Buy EUR/USD at 1.0498.

Stop-loss: Below 1.0479. Target: 1.0538 - 1.0567.

Support Level: 1.0498 Resistance Level: 1.0567

Trading involves risk. The above recommendation does not guarantee profit. Investors should assess their own capital and position management.