- Ahead of the release of the US economic growth figure later today, the EUR/USD currency pair is stable around the 1.0829 level after recovering yesterday to the 1.0866 resistance level.
- As we mentioned before, the performance may remain within a narrow range until the reaction of the markets and investors to the announcement of the US growth reading and the inflation reading preferred by the US Federal Reserve, and then the inflation figures for the euro zone.
In general, Monetary policy developments will remain a key component of currency market sentiment. There was a general decline in expectations for early interest rate cuts by both the European Central Bank and the Bank of England. According to futures markets, confidence in the ECB's April rate cut continues to fade with the focus now on June. In his comments over the weekend, ECB Council Member Stournaras noted; B “The recent slowdown in wages gives hope that we are on the right track. But we will not have enough information to decide on interest rate cuts before the end of the second quarter.
According to the economic calendar, the latest inflation data for the euro zone will be released on Friday. Consensus expectations point to a decline in the headline rate to 2.5% from 2.8%, with the core rate falling to 2.9% from 3.3%. In this regard, ING Bank commented that "a decline in core inflation below 3.0% could prompt the ECB doves to raise their voices, but the consensus within the Governing Council seems to be to wait for wage data in early 2024 before taking any steps to ease policy."
On the other hand, with growing expectations that Trump will lead the United States again, the ECB President has said that she fears the punitive tariff regime, and she has good reason. Bloomberg reported that if he regains office, Trump plans to target the European Union with a large package of combative trade measures.
While attacks on the ECB from within the 20-member euro zone have been relatively harmless compared to what its peers outside the zone have endured, looking at these precedents could encourage policymakers to see offense as the best form of defense. From Thailand to Turkey, a series of high-profile disputes over the pressure on monetary policymakers has heightened the debate.
Generally, flows at the end of February are likely to lead to a weakness in the US dollar, according to Credit Agricole Bank's assessment of potential flows in the Forex market at the end of the month. According to analysts at the European Bank, the performance of the US dollar in February indicates a moderate sell-off in the US dollar at the end of the month, especially against the Canadian dollar and the Australian dollar.
EUR/USD Technical Analysis and Forecast:
According to the performance on the daily chart attached, the price of the EUR/USD currency pair is in a neutral position, and the general upward trend will not be confirmed without moving towards the psychological resistance level of 1.1000 again. On the other hand, over the same period of time, the EUR/USD pair will return to its broader downward path by moving towards the 1.0730 support level again. All focus today will be on the US economic data and the statements of some US Central Bank policy officials.
In general, as we mentioned on the direct trading recommendations page, we still prefer selling the Euro/Dollar from every rising level.
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