The exchange rate of the EUR/USD currency pair entered the trading of the new week, supported by the growing wave of global markets, which may witness its highest level in nine months around 1.08. The rebound gains for the EUR/USD currency pair have reached the resistance level is 1.0760.
In general, the single European currency has remained near some of its strongest levels against the dollar since June in recent trading, but it may reach its highest levels in nine months or more this week if US economic data or developments in China boost global markets further with a rise Friday.
Risk assets such as equities rose, and appetite for currencies such as the euro improved on Friday after a string of data seemed to indicate that US interest rate policy was beginning to have the desired effects of softening the labor market and dampening demand across the economy. Financial markets have revised downward assumptions about how likely US interest rates will rise after Friday's data, dealing a blow to the dollar and pushing up the euro, although developments in China are likely to be front and center in the euro's path. Commenting on performance and influence factors. “Our analysis suggests that although available yields are lower than a month ago, there is still room for China-sensitive assets going forward as long as the path to reopening remains clear,” wrote Dominic Wilson, senior market advisor at Goldman Sachs.
Meanwhile, Beijing's official removal of many restrictions on international travel went into effect on Monday in a further departure from coronavirus-related restrictions that have suppressed the world's second-largest economy over the past year while also hampering the recovery of trading partner economies.
China is one of the three largest export markets in the eurozone, so its reopening is likely to be a positive development for the single European currency, although notes from Federal Reserve officials and US inflation data released on Thursday present potential risks to the euro's price against the euro. EUR/USD.
This is partly because Fed officials have sought to dampen the recent slide in US bond yields and the dollar, and also because economists and financial markets are dealing with a third month of declines in US inflation that was announced Thursday. Economists on average are looking for US inflation to drop from 7.1% to 6.6% in December, but investors have already lowered expectations for US interest rates in recent weeks, so the pound and dollar may be more vulnerable to any bullish inflation surprise than anything else. However, before then, attention will be on Federal Reserve Chairman Jerome Powell on Tuesday when he participates in a panel discussion at the Riksbank International Symposium on Central Bank Independence, as well as an appearance by other Fed policymakers.
EUR/USD forecast today:
- The price of the EUR/USD currency pair rebounded upwards for two days in a row which contributed to the bulls controlling the trend.
- Breaking the psychological resistance 1.0820 will support that, and at the same time, it starts moving the technical indicators toward overbought levels.
- I expect movement towards that peak and higher if expectations of the strength of the US interest rate hike continue to diminish in the coming period.
On the other hand, the return of the EUR/USD towards the support 1.0595 will be important for the current bullish hopes to evaporate. Today, the currency pair will be affected by the statements of US Federal Reserve Governor Jerome Powell.
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