EUR/USD Subdued Ahead of Key Data
EUR/USD Analysis
The pair runs its fifth straight profitable week, helped by the recent policy divergence between the European Central Bank and the US Fed. The ECB had maintained its aggressive stance undeterred by the recent financial turmoil and hinted at further tightening if the economy evolves as projected.
Its US counterpart on the other hand, was constrained to a more conservative approach, despite sticky inflation and tight labor market, estimating that recent deployments will likely lead to credit tightening. Officials delivered a small 0.25 rate increase last week and maintained the 5.1% terminal rate projection, suggesting just one more hike of the same size before pausing.
The Fed's new approach will encounter its first test on Friday, with the PCE inflation update, after january's reacceleration. Another strong print will put renewed pressure on the Fed for further tightening, while a moderation could support the now conservative stance. Furthermore, Eurozone preliminary CPI inflation is due on the same day. Today we expect the German figures as well as well as final Q4 GDP form the US.
The technical outlook has not changed much since our last analysis, with bulls in control and the ability to push for new 2023 highs and tackle 1.1067. EUR/USD trades with caution though today, waiting the aforementioned key data that will determine the next leg of the move. There is risk for a slide to the EMA200 (at around 0.7120), although a breach of critical 1.0530-1.0461 seems tough given the monetary policy differential.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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