The EUR/USD continues to print bearish price action after forming a peak around 1.10. The EUR/USD’s retreat has been aided by a general risk off tone across the markets, which is supporting the dollar and undermining risk-sensitive currency pairs.
On Thursday, the EUR/USD attempted to break out of its recent consolidation range by moving above 1.0780. But that breakout attempted lacked conviction and rates went back below the exiting range. The fake out has seen the bears take control of price action, driving rates below recent support at 1.0710 area. This level will be important to watch as the focus turns back to the US economy in the second half of Friday’s session.
Following the robust Canadian employment report, FX traders will turn their attention south of the border next. US sentiment surveys from the University of Michigan will be published at 15:500 GMT, followed by CPI in the week ahead. The UoM’s consumer sentiment and inflation expectations surveys have been closely monitored in recent months, as investors have tried to front-run the Fed in anticipating policy changes. The data should move the dollar if we see significant deviation from expectations. US consumer inflation data will be published on Tuesday of next week. Inflation has been falling and the Fed has responded by slowing the pace of its rate hikes to 25 basis points. It looked like the Fed would hike rates one more time, in March, before pausing. But after a much stronger jobs report, the probability of two more hikes has shot higher. If CPI comes in hotter, then this could further boost those expectations.
Insofar as today’s session is concerned, well the currency markets have been showing some affection to the dollar, while the euro and several emerging market currencies have been out of favour so far in the session. This comes as US index futures have tumbled with Nasdaq 100 futures off by about 1.3% by mid-morning European session, with the sector recently providing poor earnings results and laying off workers in a stark reversal from the boom during and immediately after the pandemic. European shares also sold off.
Sentiment has been hurt by realisation that the Fed might go further in hiking interest rates than previously expected, after last Friday’s jobs report was accompanied by hawkish commentary from several Fed officials. In addition, it is also possible that investors are concerned about valuations again after the sizeable recovery from the October lows. The UK’s FTSE has even gone on to hit a record high, despite concerns about the economy.
By Fawad Razaqzada on behalf of FOREX.com
On Thursday, the EUR/USD attempted to break out of its recent consolidation range by moving above 1.0780. But that breakout attempted lacked conviction and rates went back below the exiting range. The fake out has seen the bears take control of price action, driving rates below recent support at 1.0710 area. This level will be important to watch as the focus turns back to the US economy in the second half of Friday’s session.
Following the robust Canadian employment report, FX traders will turn their attention south of the border next. US sentiment surveys from the University of Michigan will be published at 15:500 GMT, followed by CPI in the week ahead. The UoM’s consumer sentiment and inflation expectations surveys have been closely monitored in recent months, as investors have tried to front-run the Fed in anticipating policy changes. The data should move the dollar if we see significant deviation from expectations. US consumer inflation data will be published on Tuesday of next week. Inflation has been falling and the Fed has responded by slowing the pace of its rate hikes to 25 basis points. It looked like the Fed would hike rates one more time, in March, before pausing. But after a much stronger jobs report, the probability of two more hikes has shot higher. If CPI comes in hotter, then this could further boost those expectations.
Insofar as today’s session is concerned, well the currency markets have been showing some affection to the dollar, while the euro and several emerging market currencies have been out of favour so far in the session. This comes as US index futures have tumbled with Nasdaq 100 futures off by about 1.3% by mid-morning European session, with the sector recently providing poor earnings results and laying off workers in a stark reversal from the boom during and immediately after the pandemic. European shares also sold off.
Sentiment has been hurt by realisation that the Fed might go further in hiking interest rates than previously expected, after last Friday’s jobs report was accompanied by hawkish commentary from several Fed officials. In addition, it is also possible that investors are concerned about valuations again after the sizeable recovery from the October lows. The UK’s FTSE has even gone on to hit a record high, despite concerns about the economy.
By Fawad Razaqzada on behalf of FOREX.com
