USD FORECAST AND NEWS
EUR/USD continues to trade in positive territory at around 1.0850 in the American session on Friday. The USD struggles to find demand and helps the pair hold its ground after the data from the US showed that the annual core PCE inflation softened to 2.9% in December.
Technical Overview
The Fibonacci 50% retracement level of the October-December uptrend aligns as critical support. If EUR/USD falls below that level and starts using it as resistance, 1.0740 (static level) could be seen as interim support before 1.0700 (psychological level, Fibonacci 61.8% retracement).
On the upside, 1.0830 (former support, static level) aligns as immediate resistance before 1.0865 (Fibonacci 38.2% retracement) and 1.0900 (psychological level, static level).
Fundamental Overview
After closing in negative territory on Thursday, EUR/USD extended its slide and touched its lowest level since mid-December below 1.0850. The near-term technical outlook points to a build-up of bearish momentum and additional losses could be seen if 1.0800 support fails.
The European Central Bank (ECB) left key rates unchanged as expected following the January policy meeting and didn't make any significant changes to the statement language. During the post-meeting press conference, ECB President Christine Lagarde refrained from commenting on the possible timing of a policy pivot and repeated that policymakers agreed that it was still premature to talk about rate cuts. Lagarde, however, noted that the wage growth was already declining and added that they were expecting inflation to continue to ease over the course of 2024.
Although the Euro stood relatively resilient in the immediate aftermath of the ECB event, it failed to attract buyers later in the day. Meanwhile, the risk-averse market atmosphere, as reflected by the sharp decline seen in US stock index futures early Friday, provided a boost to the USD and further weighed on the pair.
The US Bureau of Economic Analysis (BEA) will release Personal Consumption Expenditures (PCE) Price Index data for December later in the day. On Thursday, the BEA reported that the PCE Price Index rose 2% on a quarterly basis in the fourth quarter. This reading matched the third quarter's increase and came in line with the market expectation. Hence, the market reaction to December PCE inflation figures is likely to be muted.
Other data from the US showed that the Gross Domestic Product (GDP) expanded at an annual rate of 3.3%, beating analysts' estimate for a 2% growth by a wide margin and further supporting the USD.
In case safe-haven flows dominate the action in financial markets in the second half of the day, EUR/USD could have a difficult time staging a rebound ahead of the weekend.
The US Dollar was the overall winner this past week, with EUR/USD falling towards the 1.0800 mark on Friday. A slew of US macroeconomic data and the ECB monetary policy announcement were behind the pair’s declined.
In the EURUSD 2024 Forecast, our analyst, Valeria Bednarik, anticipates gains for the next couple of months. The Eurozone economy would need to show steady signs of recovery to prevent EUR/USD from collapsing below 1.0390 in the year's second half. Read more details about the forecast.
The pair traded as low as 1.0447 and as high as 1.1275 throughout 2023, with currencies moving on sentiment.
There is a note of color that would stand out in the upcoming months: the US 2024 presidential election that will take place on November 5. The contest nomination will start as soon as January and run until June. The pinch of drama comes from Donald Trump’s desire to represent Republicans once again. A potential second government of Donald Trump could mean higher inflationary pressures as Trump could reintroduce tariffs on imports and push against the agreements between China and the Biden administration.
On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.
EURUSD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EURUSD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EURUSD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
EUR/USD continues to trade in positive territory at around 1.0850 in the American session on Friday. The USD struggles to find demand and helps the pair hold its ground after the data from the US showed that the annual core PCE inflation softened to 2.9% in December.
Technical Overview
The Fibonacci 50% retracement level of the October-December uptrend aligns as critical support. If EUR/USD falls below that level and starts using it as resistance, 1.0740 (static level) could be seen as interim support before 1.0700 (psychological level, Fibonacci 61.8% retracement).
On the upside, 1.0830 (former support, static level) aligns as immediate resistance before 1.0865 (Fibonacci 38.2% retracement) and 1.0900 (psychological level, static level).
Fundamental Overview
After closing in negative territory on Thursday, EUR/USD extended its slide and touched its lowest level since mid-December below 1.0850. The near-term technical outlook points to a build-up of bearish momentum and additional losses could be seen if 1.0800 support fails.
The European Central Bank (ECB) left key rates unchanged as expected following the January policy meeting and didn't make any significant changes to the statement language. During the post-meeting press conference, ECB President Christine Lagarde refrained from commenting on the possible timing of a policy pivot and repeated that policymakers agreed that it was still premature to talk about rate cuts. Lagarde, however, noted that the wage growth was already declining and added that they were expecting inflation to continue to ease over the course of 2024.
Although the Euro stood relatively resilient in the immediate aftermath of the ECB event, it failed to attract buyers later in the day. Meanwhile, the risk-averse market atmosphere, as reflected by the sharp decline seen in US stock index futures early Friday, provided a boost to the USD and further weighed on the pair.
The US Bureau of Economic Analysis (BEA) will release Personal Consumption Expenditures (PCE) Price Index data for December later in the day. On Thursday, the BEA reported that the PCE Price Index rose 2% on a quarterly basis in the fourth quarter. This reading matched the third quarter's increase and came in line with the market expectation. Hence, the market reaction to December PCE inflation figures is likely to be muted.
Other data from the US showed that the Gross Domestic Product (GDP) expanded at an annual rate of 3.3%, beating analysts' estimate for a 2% growth by a wide margin and further supporting the USD.
In case safe-haven flows dominate the action in financial markets in the second half of the day, EUR/USD could have a difficult time staging a rebound ahead of the weekend.
The US Dollar was the overall winner this past week, with EUR/USD falling towards the 1.0800 mark on Friday. A slew of US macroeconomic data and the ECB monetary policy announcement were behind the pair’s declined.
In the EURUSD 2024 Forecast, our analyst, Valeria Bednarik, anticipates gains for the next couple of months. The Eurozone economy would need to show steady signs of recovery to prevent EUR/USD from collapsing below 1.0390 in the year's second half. Read more details about the forecast.
The pair traded as low as 1.0447 and as high as 1.1275 throughout 2023, with currencies moving on sentiment.
There is a note of color that would stand out in the upcoming months: the US 2024 presidential election that will take place on November 5. The contest nomination will start as soon as January and run until June. The pinch of drama comes from Donald Trump’s desire to represent Republicans once again. A potential second government of Donald Trump could mean higher inflationary pressures as Trump could reintroduce tariffs on imports and push against the agreements between China and the Biden administration.
On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.
EURUSD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EURUSD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EURUSD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
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