March 26, 2023
Euro and continuing dilemma
Hot Forex Review

Euro and continuing dilemma

The Euro has been floating between the Central bank’s decision and economic data. European economic data dedicating a weaker Eurozone economy, while ECB’s policymakers state that the central bank has no reason to pause rate hikes after the following March meeting.

With these data and outlook, Euro continues its side movement and dilemma after the sharp fall of early February. However, European Stock markets had a positive reaction on Thursday to published earnings reports as they confirmed the w condition of the European companies. At the time of writing, the German DAX index has been trading 0.2% higher, the CAC 40 in France, and the UK FTSE 100 were higher by 0.8%

On the other side of the Atlantic Ocean, US producer inflation also raised in January as its consumer inflation, emphasizing that inflation is still there to stay and US central bank has no choice but to continue its rate hikes and hold them high for a much more extended period. With these expectations for Fed, the effects of previous expectations from the European Central Bank will be neutralized. During last week and earlier this week, most ECB members repeated their hawkish stance, as ECB has more distance to cover than the Fed. Therefore, market expectations of another 50 bps rate hike and continuing the trend to a 4% target seem more likely. Thus, while USD is still expected to stay higher, EURUSD should continue its general natural trend and confusion.

From the technical point of view and as we can see in the below figure, after recent bulls, EURUSD fell again under 20-DMA and is expected to stay between 1.44 and 1.10 for the time being until a strong catalyst is seen in the market.

Leave a Reply

Your email address will not be published. Required fields are marked *