FOREX Fundamental analysis for EUR/USD on October 17, 2024The economic problems of the Eurozone continue to intensify. But, trouble does not come alone. Adding to the expectations of a rate cut by the European Central Bank are the risks of a revival of Trump's trade policy and an unexpected drop in UK inflation below the 2% target. This led to a drop in British bond yields, which pulled down German yields. As a result, the EUR/USD pair has almost reached the sellers' target level at 1.085.Theoretically, a rate cut by the US Federal Reserve should weaken the dollar. However, in practice, everything depends on how fast and synchronously monetary expansion takes place in other central banks. Given the weakening Eurozone economy and the possible return of the region to deflation, the ECB is likely to accelerate the pace of monetary policy easing. Especially considering that inflation is slowing down not only in individual countries, but throughout Europe.Bloomberg experts expect that on October 17, the ECB will reduce the deposit rate by 25 basis points, and predict that by the end of 2025 the rate may fall to 2%.In contrast, the U.S. economy remains relatively stable. According to forecasts by the Wall Street Journal, by the end of 2024, unemployment in the United States will rise slightly – from the current 4.1% to 4.2%, and next year the average monthly job growth will be about 130 thousand. This allows the Fed to take its time with aggressive rate cuts. The federal funds rate is expected to drop to 4.4% by the end of 2024 and to 3.5% by the end of 2025, and then it may start to rise.If Donald Trump returns to power, protectionist policies and fiscal incentives could accelerate inflation, forcing the Fed to hold down rates first and then possibly raise them again. This is favorable for the dollar, and Deutsche Bank analysts recommend buying the dollar against the euro, the Mexican peso and the South Korean won. If Kamala Harris wins, on the contrary, the dollar may weaken against the Japanese yen.Today is the day of forex trading on the news. Thursday's main event for EUR/USD will be the meeting of the European Central Bank and Christine Lagarde's press conference. If the ECB reduces the deposit rate by 25 basis points to 3.25%, investors will most likely not be surprised, since such a maneuver has already been taken into account in current quotes. Without further signals of policy easing from Christine Lagarde, the news may cause EUR/USD to rise to 1.0905 and 1.0955. If the ECB decides to cut the rate by 50 basis points, the pair is likely to fall below $1.08. In the first case, it is worth considering short—term purchases, and in the second case, strengthen short positions.EUR/USD Technical analysisEUR/USD continues to trade in a short-term downtrend. In the decline, the pair broke through the "golden zone" of 1.0878 - 1.0869. The next target of sellers is the Target zone 2 1.0794 - 1.0777. We will consider new sales at the end of the upward correction in the area of strong resistance levels, which are the following areas: resistance (A) 1.0956 - 1.0947 and (B) 1.1009 - 1.0995.The first sales target from the resistance (A) will be the 1.0904 level. The second target will be today's minimum.