EUR/USD Forecast: Uncertainty prevents EUR/USD directional movements

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0738

According to preliminary estimates, German inflation rose by 9.2% YoY in January.
Last week central banks' decisions left market players with a sour taste.
EUR/USD faded its early rally and trades at its comfort zone in the 1.0740/50 area.

The EUR/USD pair peaked at 1.0790 on Thursday, retreating in the American session to end the day in the 1.0750 price zone. The US Dollar started the day with a soft tone but changed course in the last trading session of the day. Market participants kept an eye on yields and stocks for direction in the absence of new central banks' news.

Following the United States Federal Reserve (Fed) and the European Central Bank (ECB) monetary policy decisions last week, investors were left with a sour mouth as policymakers repeated their well-known hawkish messages, somehow cooling investors' belief of changes in the tightening paths. Ever since, major pairs struggle for direction, although the USD remains near its recent multi-month lows.

Data-wise, the German Harmonized Index of Consumer Prices (HICP) unexpectedly rose by 9.2% YoY in January, below the 10% expected and easing from the previous 9.6%. On the one hand, easing inflationary pressures are welcomed news, yet on the other, it means the European Central Bank (ECB) can decelerate the pace of tightening. Also, ECB member and Bank of France head Francois Villeroy de Galhau hit the wires and said that, as of today, he thinks he can exclude a recession in the French economy.

The United States published Initial Jobless Claims for the week ended February 3, which rose by more than anticipated, hitting 196K. On Friday, Germany will release the December Current Account, while the United States will release the preliminary estimate of the February Michigan Consumer Sentiment Index alongside the University of Michigan's 5-year Consumer Inflation Expectation.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows that investors are still uncertain about the direction. EUR/USD keeps seesawing around the 61.8% retracement of the 2022 decline at 1.0745. Technical indicators remain flat within negative levels, while the pair continues to develop below a 20 Simple Moving Average (SMA), which slowly turns south. On a positive note, the 100 and 200 SMAs remain far below the current level, with the shorter aiming to advance below the longer one.

The 4-hour chart shows that the pair barely holds above a directionless 20 SMA, while the 100 and 200 SMAs, lack directional strength above the current level. At the same time, the Momentum indicator turned lower but remains within neutral levels, while the RSI indicator gains downward traction at around 45.

Support levels: 1.0700 1.0660 1.0620

Resistance levels: 1.0795 1.0840 1.0845

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.