EUR/USD Starts the Week on the Back Foot

  • EURUSD
    (${instrument.percentChange}%)

Friday's Data

Eurozone Consumer Price Index rose 5% y/y in December as Friday's preliminary figures showed, compared to 2.6% prior and 4.9 y/y final in November.

Later on that day, the US NFPs provided another disappointment, as they showed the addition of only 199K jobs in December vs +249K prior (revised from +210K).

Unemployment however continued its decline, coming in at 3.9% (vs 4.2% prior) and the Participation Rate ticked up to 61.9% (from 61.8%).

Furthermore, Average Hourly Earnings rose 0.6% on a monthly basis (from 0.4% prior revised), which fuels concerns around high inflation.

Despite poor headline print that led the US Dollar lower on Friday, markets seem to rethink the report as the rest of it was solid and did not harm the aggressive interest rates expectations, with the greenback being supported today.

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CME's FedWatch Tool projects the first rate hike as early as March and also 30% probability of a fourth increase in December. [1]

EUR/USD Analysis

The pair retreats today, as Friday's advance failed to lead above the 38.2% Fibonacci of the "October High/November Low" drop (1.1380) and the lower border of the daily Ichimoku cloud.


Past Performance: Past Performance is not an indicator of future results.

The technical outlook has not changed much, since it tests the EMA100 (black line) which keeps it vulnerable to the ascending trend-line form November's 2021 low (1.1270-60), but 1.1185 continues to seem distant.

On the other hand, the pair has been moving around the EMA100 without firm direction for nearly two months and above it, it can push again for 1.1380, but does not yet inspire confidence for a recovery above mid-1.1400.

The lack of major economic releases today may sustain this near term indecision, but tomorrow we expect Mr Powell's nomination hearing testimony, while US CPI inlflation is due on Wednesday.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

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

1

Retrieved 26 May 2022 https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html#

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