US Dollar Forecast: EUR/USD Rally Stalls Ahead of January High
The recent rally in EUR/USD seems to have stalled ahead of the January high (1.0533) as it snaps the series of higher highs and lows from last week.
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US Dollar Outlook: EUR/USD
The recent rally in EUR/USD seems to have stalled ahead of the January high (1.0533) as it snaps the series of higher highs and lows from last week.
US Dollar Forecast: EUR/USD Rally Stalls Ahead of January High
EUR/USD slips to a fresh weekly low (1.0440) to pull the Relative Strength Index (RSI) back from its highest level since September, and the exchange rate may face a further decline ahead of the next Federal Reserve meeting in March as Governor Christopher Waller reveals that he’s in favor of ‘holding the policy rate steady’ while speaking at the University of New South Wales Macroeconomic Workshop.
Governor Waller goes onto say that ‘I believe a pause in rate cuts is appropriate,’ and it seems as though the Federal Open Market Committee (FOMC) is in no rush to further unwind its restrictive policy as ‘the data are not supporting a reduction in the policy rate at this time.’
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In turn, the ongoing expansion in employment may push the FOMC to further combat inflation as the economy shows little signs of a recession, and EUR/USD may struggle to retain the advance from the monthly low (1.0211) as Fed officials tame speculation for an imminent rate-cut.
With that said, the failed attempt to test the January high (1.0533) may keep EUR/USD within the yearly range, but the pullback in the exchange rate may turn out to be temporary as it no longer responds to the negatives slope in the 50-Day SMA (1.0394).
EUR/USD Chart – Daily
Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView
- EUR/USD snaps the series of higher highs and lows from the previous week amid the failed attempt to test the January high (1.0533), and lack of momentum to hold above the 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension) zone may push the exchange rate back towards 1.0370 (38.2% Fibonacci extension).
- Next area of interest comes in around 1.0200 (23.6% Fibonacci retracement), but EUR/USD may hold within the January range should it defend the monthly low (1.0211).
- At the same time, a breach above the January high (1.0533) brings the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) region on the radar, with the next area of interest coming in around the December high (1.0630).
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USD/JPY Pulls Back Ahead of Monthly High to Halt Three-Day Rally
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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