The USD has started the week in a retreat against most major currencies, continuing last Friday’s price action, when we saw a bearish reversal in the
The USD has started the week in a retreat against most major currencies, continuing last Friday’s price action, when we saw a bearish reversal in the US session after being bullish for most of the week. We saw an advance against most major rivals early in the early hours of the Asian session, as geopolitical headlines took over the weekend.
But, that fell short and the decline has resumed again. EUR/USD however, has been confined in a tight 30 pips range all day, trading below 1.07. A scarce economic calendar and a bank holiday weekend in the US will limit volatility until Tomorrow, so we don’t expect much action, especially to the upside.
The 50 SMA (yellow) has been acting as resistance for this pair since early last week and we decided to open a sell EUR/USD signal below this moving average. The geopolitical tensions between the United States, North Korea and Russia after Biden’s visit to Ukraine to announce additional weapons supplies against Russia are negative for risk sentiment, which should help the USD further in the week.
But, for now markets are trading the price action from last Friday. The consumer confidence report was released a while ago from the Eurozone and showed a slight improvement, but remains deeply negative, which is a negative fundamental for the Euro.
EU Consumer Confidence Flash Estimate for February 2023
EU /consumer confidence for February
- EU flash consumer confidence for February -19.0 versus -19.0 expected
- Prior month -20.9 revised to -20.7
- Consumer confidence flash for February -19.0 versus -19.0 estimate
The low for 2022 was reached in September 2022 at -28.0. The high for 2022 was in January at -8.5 points. ECB is pressing for more rate hikes, but markets are not taking too much from their comments at the moment.
ECBs Rehn Speaking:
- Appropriate to raise rates beyond March.
- Terminal rate could be reached this summer.
- Rates need to be restrictive for some time
- Hikes should not stop while core inflation is rising and is so high
- Recession likely avoided. 2023 growth could be around 1%
So, EUR/USD has peeked at the 50 moving average around 1.07, but the downward trend is still prevailing so we are keeping a bearish bias for this pair.
EUR/USD
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