EURUSD Forecast and News


EUR/USD extends slide on hawkish Powell comments, trades below 1.1250

EUR/USD extended its daily slide during FOMC Chairman Powell's press conference and fell to its lowest level in more than a month below 1.1250. Reflecting the renewed dollar strength, the US Dollar Index is up more than 0.5% on a daily basis at 96.50.

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Technical Overview

EUR/USD's technical outlook indicates that the bearish bias stays intact in the near term with the pair staying below the descending trend line coming from mid-January. Furthermore, the lack of buyer interest is mirrored by the Relative Strength Index (RSI) on the four-hour chart, which has been staying below 50 since the beginning of the week.

The pair recovered to 1.1300 after the bearish pressure faded away near 1.1270 (static level) on Tuesday, suggesting that this level aligns as first support. If buyers fail to defend that level, 1.1250 and 1.1230 static levels could be tested. 

On the upside, resistances could be seen at 1.1300 (psychological level, static level), 1.1330 (200-period SMA) and 1.1350 (100-period SMA).


Fundamental Overview

 

EUR/USD has turned south after failing to extend its recovery beyond 1.1300 during the European trading hours. With the dollar preserving its strength ahead of the Fed's highly-anticipated policy announcements, the pair has retreated to the 1.1270 support area. Although a drop below this level could be seen as a bearish development, investors might opt to stay on the sidelines while waiting to see how the dollar reacts to the FOMC event. 

Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar.

In case the Fed suggests that they could start shrinking the balance sheet after the first rate hike, most likely in March, the US Treasury bond yields could shoot higher and provide a boost to the greenback. Moreover, the dollar is likely to benefit from a Fed decision to end the QE earlier than planned by ramping up the pace of reduction in monthly asset purchases.

On the flip side, the Fed might voice its concerns over a worsening global economic outlook and communicate a patient stance with regards to tightening steps in the future. Such a tone should trigger a sharp recovery in US stocks and make it difficult for the dollar to find demand. 



SPECIAL WEEKLY FORECAST

Interested in weekly EURUSD forecast? Our experts make weekly updates forecasting the next possible moves of the euro-dollar pair. Here you can find the most recent forecast by our market experts:

EUR/USD: Federal Reserve between a rock and a hard place Premium

The EUR/USD pair gave up its latest gains and returned to its comfort zone, just a handful of pips above the 1.1300 figure. The pair lost the most on Tuesday when US traders returned to their desks and pushed government bond yields to levels last seen in February 2020.

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Editors' picks

EUR/USD extends slide on hawkish Powell comments, trades below 1.1250

EUR/USD extended its daily slide during FOMC Chairman Powell's press conference and fell to its lowest level in more than a month below 1.1250. Reflecting the renewed dollar strength, the US Dollar Index is up more than 0.5% on a daily basis at 96.50.

EUR/USD News

GBP/USD drops below 1.3500 on renewed dollar strength

GBP/USD lost its traction and fell into the negative territory below 1.3500. The greenback seems to be capitalizing on FOMC Chairman Jerome Powell's hawkish remarks, causing the pair to continue to edge lower. 

GBP/USD News

USD/JPY remains well supported above 113.70 ahead of Fed decision

USD/JPY recaptures 114.00 amid resurgent US dollar demand. Markets expect Fed to shift to the hawkish pivot, hinting at a March rate hike. 50-DMA is the level to beat for bulls while above the critical support at 113.72.

USD/JPY News

Gold bears sink their teeth into the market on hawkish Powell pivot

At $1,817.59, gold is moving towards the close and down some 1.65% after falling from a $1,850.11 high to test a low of $1,814.98. The drop came on the back of a hawkish twist at the Federal Reserve event on Wednesday.

Gold News

WTI briefly surpasses $87.00 level, eyes multi-year highs as geopolitical tensions eyed

Front-month WTI futures hit fresh highs for the week above the $87.00 level on Wednesday, as a broad risk appetite recovery combined with ongoing geopolitical and OPEC+ supply concerns underpinned the price action. WTI is now nearly $4.50 or over 5.0% higher versus Monday’s lows near $82.00 per barrel and earlier in the session when prices surpassed the $87.00 mark, was only a whisker below last week’s multi-year highs at $87.90 per barrel.

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EURUSD Yearly forecast

How could EURUSD move this year? Our experts make a EUR/USD update forecasting the possible moves of the euro-dollar pair during the whole year. Don't miss our 2022 EURUSD forecast!

EURUSD FORECAST 2022

In the EURUSD 2022 Forecast, our dedicated contributors expect the bearish trend to continue, almost during the Q1 and the Q2 of 2022. By the end of the year 2021, the average outlook for the pair was 1,1306. Read more details about the forecast.

From Jan 2021 to Dec 2021, the maximum level for the EURUSD (Euro US Dollar) was 1.2328 (on 06/01/21), and the minimum, 1.1200 (on 24/12/21).

MOST INFLUENTIAL POLITICAL EVENTS IN 2022 FOR EURUSD

Much water has run under the bridge in 2021. Central bankers from around the world have been cooling down speculation on persistently high inflation, calling in “temporarily,” and forecasting it would slowly stabilize to more suitable levels by 2022. But make no mistake: Hot inflation is the elephant in the room. Central banks' measures will be key for EUR/USD moves this next year. The coronavirus pandemic that hit the world in March 2020 still goes on and will also be a critical event in 2022, although there’s a better economic perspective.


Influential Institutions & People for the EUR/USD

The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:

The European Central Bank (ECB)

The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism. 

The Federal Reserve Bank (Fed)

On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.


Christine Lagarde

Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).

Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

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About EURUSD

The EURUSD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EURUSD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.

Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EURUSD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.

Related pairs

GBP/USD

The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.

The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.

USD/JPY

The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.

Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.