The EURUSD pair has sparked a heated debate in the financial world, with its recent surge above 1.20. This move has been influenced by some intriguing factors, and it's time to dive into the details. The weak dollar, endorsed by none other than President Trump, has sent shockwaves through the market. But here's where it gets controversial...
The US Dollar's decline isn't solely driven by fundamentals; it's a technical move triggered by intervention risks. Typically, these moves are short-lived, but the dollar lacks a compelling reason to appreciate.
Today's FOMC decision is expected to maintain the status quo, with no surprises anticipated. However, watch out for Powell's potential revelation about his future plans, which could send markets into a hawkish frenzy.
February could bring some relief for the US Dollar, as new economic data, including the NFP report, may shift market expectations. Notably, improvements in US Jobless Claims data suggest a potential re-acceleration in the labor market, which could support the greenback.
On the EUR side, ECB members are feeling uneasy as the EUR/USD pair crosses the 1.20 threshold. This level is a red flag for the ECB, as its Vice President de Guindos previously stated that a rise above 1.20 would complicate matters.
If the euro continues to strengthen and Eurozone inflation data softens, traders may price in another rate cut from the ECB.
Technically speaking, on the daily chart, EURUSD has broken through the 1.20 level, indicating a potential drop back to the 1.16 handle. Buyers, however, aim to push prices above 1.20 for new highs.
The 4-hour chart reveals an upward trendline, offering buyers a favorable risk-reward setup for a rally. Conversely, sellers target a break below the trendline towards the 1.1850 level.
On the 1-hour chart, a counter-trendline acts as resistance, with sellers leaning on it to push prices lower. Buyers, on the other hand, seek a break above this line to increase bullish bets.
Upcoming catalysts include today's FOMC rate decision and Trump's potential Fed chair pick announcement. Tomorrow, US Jobless Claims figures will be released, followed by the US PPI report on Friday.
And this is the part most people miss: the impact of these events on the EURUSD pair. Will the dollar's weakness persist, or will it find support? Will the ECB's concerns materialize into policy actions? These questions remain open, and the market's reaction will be crucial.
What's your take on this? Do you think the EURUSD pair will continue its upward trajectory, or will it correct? Share your thoughts and predictions in the comments below!
