EUR/USD Forecast: Battle around 1.0600 underway

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0610

European core inflation was higher than initially anticipated in January.
FOMC Minutes underpin US Dollar demand amid hints of more monetary tightening.
EUR/USD bounced modestly from a fresh February low, risk skewed to the downside.

The EUR/USD pair fell through the 1.0600 threshold and posted a fresh February low of 1.0585, as the Greenback continues strengthening on the back of hawkish US Federal Reserve (Fed) prospects. The United States central bank released the Federal Open Market Committee (FOMC) Meeting Minutes on Wednesday, which were more hawkish than anticipated.

The central bank hiked its benchmark rate by 25 basis points (bps) on February 1 before the release of higher-than-anticipated inflation figures. The Minutes, however, showed that a few members would have preferred a 50 bps hike and that participants believe the continued tight job market would contribute upward pressure to inflation. Finally, policymakers noted that, while inflation is easing, they would need further signs to step back. The news boosted demand for the US Dollar as stock markets turned south.

Early on Thursday, the Euro Zone published the final estimate of the January Harmonized Index of Consumer Prices (HICP), confirmed at 8.6% YoY. However, the core reading was upwardly revised to 5.3% from a preliminary estimate of 5.2%. The American session will bring the second estimate of the US Q4 Gross Domestic Product (GDP) and Initial Jobless Claims for the week ended February 17.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair shows it has room to extend its slump. The 20 Simple Moving Average (SMA) gains downward traction above the current level, now converging with a Fibonacci resistance at 1.0745, the 61.8% retracement of the 2022 slump. The 50% retracement of such a decline stands at 1.0515, a potential bearish target should the slide continues. At the same time, technical indicators remain within negative levels, although losing their bearish strength.

In the near term, and according to the 4-hour chart, the ongoing recovery falls short of supporting a continued advance. The pair continues developing below all its moving averages, with the 20 SMA accelerating south below the longer ones. Technical indicators, in the meantime, have recovered from their intraday lows but lack momentum and hold within negative levels.

Support levels: 1.0560 1.0515 1.0470

Resistance levels: 1.0630 1.0695 1.0745

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY hovers around 156.00 as more hawkish BoJ bets cap gains

USD/JPY holds steady above 156.00 on Monday as the US Dollar draws support from escalating US-Iran tensions and rising Fed rate-hike bets, bolstered by Friday's upbeat NFP report. Moreover, concerns over Japan’s fiscal outlook keep the Japanese Yen on the back foot and support the currency pair, though more hawkish BoJ expectations and a suspected intervention cap the upside.

Gold flat lines above $4,400 as Fed hike bets and Iran tensions support USD

Gold kicks off the new week on a subdued note, though it holds above $4,400. Friday's upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpin the safe-haven US Dollar and cap the bullion. The lack of follow-through selling, however, warrants caution before confirming that the recent bounce from a nearly four-week low has run out of steam.

The week ahead: Dollar at a crossroads as CPI and ECB take centre stage

With the summer finally over, investors returned with a strong appetite for action. Following last week’s strong performance, the US dollar has taken a back seat so far this week, as oil, the yen and sovereign bond yields monopolized market interest.

CFTC report: Oil rebound offsets broader positioning retreat

The week in one sentence: Speculative positioning became more defensive in the week ending September 1. Yen short positioning recorded the largest deterioration, while Gold length also retreated. Oil buying returned alongside stronger prices, and Canadian Dollar and Euro positioning improved, although Euro flows diverged from weaker spot prices.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.