Risk aversion causes the EUR/USD to fall toward 1.0600.
On Friday, the EUR/USD lost momentum and fell near 1.0600 after
initially rising toward 1.0650 in response to the gloomy US PMI data. The US
Dollar gains strength and puts pressure on the pair as a result of the negative
shift in risk sentiment.
Following the erratic trading on Thursday, the EUR/USD pair has begun
to rise early on Friday. The short-term technical forecast for the pair
indicates that the bullish bias is still present. The pair may finish the week
strong unless safe-haven flows take over the markets before the weekend.
Following its policy meeting in December, the European Central Bank
(ECB) made the widely expected announcement that it had increased its main
interest rates by 50 basis points. However, ECB President Christine Lagarde
made unexpectedly aggressive remarks at the news conference, which led to a
surge in the euro.
In response to a question regarding the rate outlook, Lagarde stated
that "based on the information that we currently have available, that
predicates another 50 basis-point rate hike at our next meeting, and possibly
at the one after that, and possibly thereafter, but everything will also be
determined by the review of data." Because it's more than that, don't
assume it's a one-shot 50.
Despite rising to a new multi-month high of 1.0736 in response to these
statements, the EUR/USD ended up concluding the day in the red as safe-haven
flows helped the US Dollar outperform its competitors during the American
trading hours.
The market's slight Friday morning improvement indicates that the ECB's
hawkish perspective on the Euro is once again having a favorable effect. US
stock index futures were trading flat as of the time of publication. The
EUR/USD is anticipated to gain bullish momentum in the afternoon if Wall
Street's major indexes recover after Thursday's severe fall.
Later in the day, S&P Global will announce the preliminary Manufacturing and Services PMIs for the US, the Eurozone, and Germany. The market response to PMIs is probably going to be fleeting because investors are analyzing the ECB and Fed's policy pronouncements.
Support and Resistance levels for EUR/USD (Technical and Historical
levels Analysis) – Forex Trading Tips
Resistance Levels
1.0740
1.0700
1.0680
Support Levels
1.0630
1.0600
1.0560
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