EUR/USD shows no signs of returning to winning ways as investors continue to buy into a hawkish Fed stance. The latest losses by the Euro saw it trade at 1.0752, propelled by the FOC Chairman Jerome Powel’s comments on CBN News’ 60 Minutes on Sunday, stating that cuts are unlikely to come before the end of Q1.
The US dollar is not only performing well against the euro, but it has also been on an uptrend against six other major currencies, with the DXY index at an eight-week high. The index was at +0.45 for the day and +0.44% week-on-week at the time of writing.
In addition to the Fed interest rate decision, traders have also favoured the dollar due to a positive economic outlook in the US. The latest of these was impressive jobs data for January, which came at 353,000 against a projected 187,000. This was the second consecutive month when the number of jobs created had far surpassed analysts’ projections.
In the short-term, greater focus will likely shift toward US Non-Manufacturing PMI figures set to be released today. Meanwhile, Eurozone economies still have a delicate balancing act between stimulating economic growth and meeting the European Central Bank’s target 2% inflation rate. The trading block’s economies have been on a lull. A 0.1% contraction in Q3 of 2023 was followed by stagnation in Q4, to record a measly 0.5% all year.
The US economy, on the other hand, exceeded expectations to register a 2.5 % growth. High energy prices and a struggling German economy will certainly not help matters, especially in the face of continued sanctions against Russia’s cheap energy.
The RSI favours downward momentum for the EUR/USD pair, and we are likely to see resistance at 1.0785, with supports at 1.0745 and 1.0720. A breach above the 1.0785 level could set in motion movement towards the second resistance at 1.0810. Beyond that point, the target price will move to 1.0840.
EUR/USD 30-minute chart
This post was last modified on Feb 05, 2024, 14:32 GMT 14:32