The euro is under pressure
The euro / US dollar has reached its lowest level since June 3, 2020, as traders assess the divergence between the eurozone and the US economy. The pair is trading at 1,150, which is about 3% lower than the highest level this year.
US economy and the euro area
Recent economic data show that the US economy is recovering faster than the euro area. For example, on Friday, German statistics showed that economic growth slowed in the fourth quarter. Other countries, such as France and Spain, are experiencing significant improvements.
While the German economy shrank, the US economy grew strongly in the fourth quarter. This was a sign that the effects of the Omicron type were not as severe as analysts had expected.
Meanwhile, the US labor market has been stronger than Europe. For example, the unemployment rate in the United States has dropped to 3.9 percent. In Europe, the unemployment rate is around 7%.
Thus, the EUR / USD pair has fallen as investors predict that the Federal Reserve will be more aggressive than the European Central Bank.
Analysts have differing views on the number and size of the Federal Reserve raising interest rates. Goldman Sachs analysts, for example, expect the Federal Reserve to raise five interest rates this year. Other analysts at other banks forecast about 3 or 4 increases.
Central bank officials are also unsure of what to expect. Analysts, on the other hand, expect the European Central Bank to continue its low-easing purchases and is unlikely to increase this year.
Later this week, the EURUSD pair will react to the latest US jobs figures and eurozone inflation figures for January.
Euro-dollar forecast
The daily chart shows that the EUR / USD pair has been in a strong downtrend recently. In the daily chart, we see that the pair has been able to move down the pattern of the bearish flag shown in black. It also fell below the 25-day and 50-day moving averages while the stochastis oscillator reached the sell-off level.
Therefore, this pair is likely to be ahead of the latest US NFP data. The next key station to watch will be at 1,1050.
The euro / US dollar has reached its lowest level since June 3, 2020, as traders assess the divergence between the eurozone and the US economy. The pair is trading at 1,150, which is about 3% lower than the highest level this year.
US economy and the euro area
Recent economic data show that the US economy is recovering faster than the euro area. For example, on Friday, German statistics showed that economic growth slowed in the fourth quarter. Other countries, such as France and Spain, are experiencing significant improvements.
While the German economy shrank, the US economy grew strongly in the fourth quarter. This was a sign that the effects of the Omicron type were not as severe as analysts had expected.
Meanwhile, the US labor market has been stronger than Europe. For example, the unemployment rate in the United States has dropped to 3.9 percent. In Europe, the unemployment rate is around 7%.
Thus, the EUR / USD pair has fallen as investors predict that the Federal Reserve will be more aggressive than the European Central Bank.
Analysts have differing views on the number and size of the Federal Reserve raising interest rates. Goldman Sachs analysts, for example, expect the Federal Reserve to raise five interest rates this year. Other analysts at other banks forecast about 3 or 4 increases.
Central bank officials are also unsure of what to expect. Analysts, on the other hand, expect the European Central Bank to continue its low-easing purchases and is unlikely to increase this year.
Later this week, the EURUSD pair will react to the latest US jobs figures and eurozone inflation figures for January.
Euro-dollar forecast
The daily chart shows that the EUR / USD pair has been in a strong downtrend recently. In the daily chart, we see that the pair has been able to move down the pattern of the bearish flag shown in black. It also fell below the 25-day and 50-day moving averages while the stochastis oscillator reached the sell-off level.
Therefore, this pair is likely to be ahead of the latest US NFP data. The next key station to watch will be at 1,1050.