The G20 summit took place in Bali, Indonesia, on November 2022…
EUR/USD: How To Trade The Pair This Week
Information is not investment advice
EUR/USD ended last week with a steamrolling. This week, the pair keeps edging up. Why? First, the uncertainty over the new Covid-19 variant, omicron, led to a surge in demand in safe-haven currencies such as the Japanese yen and the Swiss franc. Since the US dollar lost its safe-haven role, traders preferred the EUR to the greenback. Second, the USD was rising as the markets were pricing in the rate hike by the Federal Reserve. However, omicron raised concerns that the US central bank can delay a rate increase – the bearish factor for the USD. Overall, a recovery in the US dollar depends on the vaccine progress against the omicron variant.
Today, on Wednesday, we see the US dollar climbing up. It is the result of Powell’s comments. Jerome Powell is the Federal Reserve Chair. He signaled his intention to taper faster, and it supported the USD.
Both omicron and Powell’s comments increased volatility in EUR/USD. What to expect further? The US will reveal essential economic data in the upcoming weeks. If it is strong, the Fed can turn more hawkish at the FOMC meeting on December 16.
The overall trend is bearish. EUR/USD has been moving down since May. However, the short-term trend is bullish as EUR/USD surged and recovered some losses thanks to the weak dollar. It has failed to cross the resistance level of 1.1370 – the high of November 19. The pair can reverse down to the recent low of 1.1260. If it crosses it from the top down, there are more chances the pair will fall further to the psychological mark of 1.1200. Resistance levels are 1.1370 and 1.1460.
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.