For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
Is the euro’s fall so dramatic?
EUR/USD has suffered losses during the last several days. There are several factors which affect the single currency.
Firstly, there’s political uncertainty in Germany. Social Democrats will vote this weekend on whether they want to form coalition with Angela Merkel. If they say “yes” to Merkel, the euro will find a support, if not, it will remain under pressure. Secondly, traders await Italian parliamentary election on March 4. There are risks because some parties want the country out of the European Union. Furthermore, European PMI data released this week was disappointing.
Another reason of the pair’s decline was the stronger US dollar. The minutes of the Federal Reserve made traders talk about more rate hikes. The more the USD strengthens its positions, the more the euro falls.
However, the picture is not so dramatic as it may seem from the first sight. The region’s economy is expanding at the fastest pace in eight years and sentiment is optimistic.
Technically the general uptrend is still in place. The single currency is moving in range with a resistance at 1.2520 and a support at 1.22. Decline below 1.22 will bring the pair to 1.20, where there will be new buyers. The key event which will either push the euro to new highs or let to the break in the trend is the European central bank meeting on March 8. Until then, we expect the pair to stay around the mentioned levels.
The higher prices seen today are generally related to the pandemic, that’s no doubt. US consumer prices jumped in October at the fastest pace in three decades putting the Biden administration on the defensive and increasing prospects that the Federal Reserve will raise interest rates next year. Jerome Powell says Fed will discuss speeding up bond-buying taper at the December meeting. What does it mean for markets?
It seems like most of the assets have joined Black Friday's sell-off with global indices, risky currencies, and commodities going down.
Although the last week was intense, this one may be more dynamic and volatile. After the FOMC meeting and controversial decisions from the Bank of England, we saw a historical pound decrease, and the gold plunge. And there’s even more for you.
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In this video, we will talk about the potential change of a trend in the euro, another stock rally amid a global downtrend, gold prospects, and news that shakes the world right now. It’ll be a helpful video you don’t want to miss.