EUR/USD Remains Vulnerable Ahead of Key Data Releases
EUR/USD Remains Vulnerable Ahead of Key Data Releases
The currency pair has weakened since the beginning of January, losing much of its December gain. It’s likely to be relegated to a trading range this week ahead of a series of key data releases including U.S. employment data and European GDP figures.
Eurozone unemployment data could be the key to determining whether EUR/USD stays above support at 1.0655 or reaches a weekly low around 1.0645. Should the pair breach these levels, the next target will be a strong Fibonacci retracement of 2022 decline at 1.0785.
Expectations for EU GDP growth and employment are also a crucial factor for the EUR/USD. Professional forecaster estimates suggest that the Eurozone economy edged higher by 0.1% in the final quarter of 2018. Nevertheless, there are risks that the currency may falter if surprises in both areas are announced.
Inflation is another factor that impacts the currency pair. Central bankers from around the world are taking measures to cool down persistently high inflation. They say that inflation will slowly settle down to more suitable levels in the future.
The US Federal Reserve (Fed) and the European Central Bank (ECB) are both committed to tackling high inflation, and they will continue to raise interest rates over time. Moreover, they will monitor incoming data trends closely and decide whether to tighten monetary policy or not.
If the Fed tightens monetary policy, it will likely have a positive impact on the EUR/USD. This is because the dollar is a major exporter for the Eurozone, and any increase in the value of the dollar will result in an increase in the price of the Euro.
It is important to remember that forex markets are volatile and can move quickly. Hence, it is always best to carry out your own research before making any investment decisions. You should also weigh the latest market trends and news, technical and fundamental analysis, and expert opinion before you make any trades.
Economic reports and events are the most influential factors that affect the foreign exchange market. These reports include economic indicators such as inflation, the balance of payment, and the unemployment rate. These numbers are usually released during the different market sessions, which are Asian sessions, European sessions, and North American sessions.
ING Bank expects the Euro to find some support this week. It said in a note Monday that the pair will fall to 0.8800 this week but it expects markets are running out of reasons to stay bearish on it for longer.
Russia’s gas pipeline shutdown is another factor that could negatively impact the euro. It is likely to increase the cost of European energy imports, especially in the short term.
The US central bank’s decision to cut its monetary stimulus program will be a key factor in determining the direction of the EUR/USD over the next several years, says Alex Saravelos, chief economist at ING. He added that the global economy is currently in a very good position and a recession is unlikely this winter.
