EUR/USD Tries to Steady Ahead of Key Tech Level & US NFPs


EUR/USD Analysis

The common currency has plunged against the greenback this week as fears of recession and Germany's dependency on Russian gas make investors doubt the tightening prospects of the European Central Bank, with interest rates lift-off expected later this month.

The US Federal Reserve on the other hand is far more aggressive with its policy normalization, having delivered its biggest hike in nearly thirty years in June and has also pointed to a similar move for July, despite the fact that GDP contracted by 1.6% in the first quarter.

Speaking at the National Association for Business Economics (NABE) yesterday, Governor Waller dismissed fears of recession as "kind of overblown", while advocating for another 0.75% rate increase this month. [1]

EUR/USD posted its worst day of the year on Monday and loses around 2.5% on the week at the time of writing, trading at levels not seen since late-2002. Although we are cautious by default around such outcomes and their sustainability, parity has now become a distinct possibility.

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The pair is exposed to the critical 76.4% Fibonacci of the 2000 Low/2008 High advance (1.0072), although the December 2002 lo (0.9856) seems a distant for now.

Markets seem to be trying to overcome their recession fears and this may help lift the pair. We could see an effort to reclaim the EMA100 at around 1.0260, but a strong catalyst will be required for a more substantial rebound that would challenge 1.0034-9.

Given this week's increased volatility and historic move, caution is needed, while we also expect the US Jobs report and speech by Ms Lagarde later today, which have the potential to affect the pair's trajectory.

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.



Retrieved 05 Oct 2022


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