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.
Share this:
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.’
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
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).
Additional Market Outlooks
USD/CAD Forecast: Canadian Dollar Unfazed by CPI as Trump Tariffs Loom
Gold Price Forecast: RSI Falls Below 70 to Indicate Sell Signal
GBP/USD Clears January High After Closing Above 50-Day SMA
USD/JPY Pulls Back Ahead of Monthly High to Halt Three-Day Rally
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD Analysis: Euro Confidence Remains Limited After the ECB
The trading week is approaching its end and, for now, a neutral tone continues to dominate the euro's short-term price action. EUR/USD has recorded a move of only around -0.15% during the week, highlighting the pair's inability to establish a clear direction in favor of either the euro or the U.S. dollar.
US Dollar Price Action Setups in Central Bank Week
We’ve heard from the Fed, ECB and BoC with the BoJ up next later tonight and DXY trajectory hangs in the balance depending on how hawkish the Bank of Japan might turn out to be.
Gold forecast: XAU/USD struggles as traders eye breakdown
After a three-day recovery, gold prices have fallen in excess of 1.2% so far today, as the metal continues to hover around the $4,000 level. Today’s bearish price action threatens this key level, especially when you consider last week’s 4% sell-off. For now, gold is hanging around this psychological threshold, but it remains to be seen whether it will hold for too long.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.