- EUR/USD meanders slightly above the 200-day EMA, a magnet for EUR/USD bears.
- Hotter-than-expected US labor market data warrants further rate hikes by the Fed.
- ECB’s policymakers split by tightening aggressively or gradually.
- EUR/USD Price Analysis: If the pair tumbles below the 200-DMA, that would pave the way towards 1.0400.
EUR/USD remains unchanged at 1.0545, below the 200-day Exponential Moving Average (EMA) as Fed Chair Jerome Powell testifies before the US Congress. Meanwhile, US equities continued to fluctuate, portraying a mixed sentiment, while the US Dollar turned positive. At the time of writing, the EUR/USD is trading at 1.0545.
EUR/USD stays firm around familiar levels amidst the lack of a catalyst
The EUR/USD has failed to gain traction either way after US economic data backed the latest commentaries by Jerome Powell. Although January’s JOLTs report showed a decrease In openings at 10.8M, it exceeded estimates of 10.5M.
Earlier, the February US ADP Employment Change report revealed that the US private sector added 242,000 jobs, more than the expected 200,000. That said, figures from both reports reinforced what Federal Reserve officials have commented about a tight labor market, which would warrant further tightening by the Federal Reserve. That could weigh on the Euro (EUR); therefore, a further downside in the EUR/USD is expected.
Before Wall Street opened, the Richmond Fed President Thomas Barkin commented that inflation is still high and that the Fed stills have work to do. Later at the US House of Representatives, Fed Chief Jerome Powell said that the Fed had not decided yet about the upcoming March meeting. Powell added that China’s reopening could spur another round of inflation due to higher commodity prices.
In the Euro area (EU), European Central Bank (ECB) policymakers have remained hawkish. Earlier in the week, ECB’s Knot said that the central bank needs to keep hiking rates for some time, echoing Robert Holzmann’s words to raise rates by 50 bps due to stubborn inflation.
Ignazio Visco, ECB’s Governing Council (GC) member, commented that monetary policy must remain cautious and driven by economic data, favoring gradual rate increases. In the meantime, an ECB survey showed that EU consumers expect inflation to moderate and wages to rise. Meanwhile, Citigroup expects the ECB to raise rates to 4% by mid-2023.
EUR/USD Technical levels
The EUR/USD is neutral biased, though about to test the 200-day EMA. Tuesday’s fall below the 100-day EMA at 1.0554 exacerbated a fall toward the 200-day EMA, viewed as a trendsetter level for EUR/USD traders. A decisive break below 1.0536, the 200-day EMA would accelerate the EUR/USD pair fall toward 1.0500. Once cleared, the following support would be the YTD low at 1.0482, followed by the November 30 low at 1.0290.
What to watch?
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.