Saturday, January 28, 2023

EUR/USD: Bulls regain control and target 1.0900

  • EUR/USD moves up significantly and marks new highs near 1.0890.
  • The dollar fell to a fresh multi-month low near 101.50.
  • US retail sales and production prices disappointed expectations.

euro/usd Gained strength and touched a new yearly high near 1.0890 on Wednesday.

EUR/USD strengthens on strong USD selling

Bullish sentiment remains around the risk complex following a sharp selloff in the dollar as the USD (DXY) index hit an 8-month low near 101.50.

Against this background, EUR/USD reversed the recent 3-day weakness and moved towards the range of 1.0890 level, at the same time making new highs in the area last seen at the end of April 2022.

Supporting the better tone of the single currency, ECB Council member O. Rehn, who suggested that a significant increase in rates in the short term appears appropriate to keep inflation expectations in check.

On the national calendar, results for the month of December in the euro bloc showed a 12.8% year-on-year increase in car registrations, while the final CPI rose 9.2% year-on-year and 5.2% year-on-year. year for CPI. built-in.

In the US, retail sales contracted 1.1% MoM in December and producer prices fell 0.5% MoM in the same period. Additionally, MBA mortgage applications rose 27.9% in the week to January 13 and industrial production contracted 0.7% in December compared to the previous month.

NAHB Index, Business Inventories, TIC Flow and Fed’s Beige Book will be released later in the session.

In addition, the FOMC’s Bastick, Bullard, Harker and Logan will also make statements.

What to expect from EUR

The EUR/USD pair has regained momentum and is now trading close to the key round level of 1.0900, always in response to a persistent selling trend around the dollar.

Price action around the European currency should continue to be closely followed by dollar dynamics as well as the impact of the energy crisis on the euro bloc and the Fed-ECB divergence.

Returning to the euro zone, rising speculation about a possible recession in the bloc emerges as the major domestic headwind facing the euro in the near term.

technical level

For now, the pair gains 0.68% at 1.0860 and faces the next bullish barrier at 1.0887 (January 18th monthly high), followed by 1.0900 (rounding level) and finally 1.0936 (April 21st weekly high). On the other hand, a break of 1.0776 (weekly low Jan 17) will target 1.0481 (monthly low Jan 6) on the way to 1.0443 (weekly low Dec 7).

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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