EUR/USD Upbeat Ahead of the Fed’s Minutes
EUR/USD Analysis
The pair made a poor start to the year with its two-day slump and caution is still needed due to the holiday liquidity/volatility conditions. However, it stages a solid rebound today as investors await a series of economic releases, which are highlighted by the minutes of the last policy decision by the Federal Reserve.
The US central bank had slowed down the pace of tightening with a smaller 0.5% rate hike in December [1], as recent data have shown a moderation in inflationary pressures. The Fed's preferred measure - the Core PCE - eased to 4.74% y/y in November, to the lowest level since July.
However, Chair Powell had stuck an aggressive tone and the bank upgraded its terminal rate projection, so investors will be looking for more insights into the thinking of policy makers in today's accounts. The European Central bank meanwhile, out-hawked its US counterpart, expecting to raise rates "significantly at a steady pace". [2]
EUR/USD comes from a three-month advance, having covered around 38.2% of the 2021 high/2022 multi-year low. Having defended the EMA200 (black line), the upward bias is intact, allowing it to push for higher highs towards 1.0787, but does not inspire confidence for further gains towards and beyond 1.0942.
On the other hand, EUR/USD has failed to move away of the critical 38.2% Fibonacci and the poor start to the year creates risk for a decline back to 1.0392, but a strong catalyst is required for further losses that would put 1.0199 into question.
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. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 03 Jan 2023 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20221214.htm | |
| Retrieved 01 Dec 2023 https://www.ecb.europa.eu/press/pressconf/2022/html/ecb.is221215~197ac630ae.en.html |
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