The Euro seems to be defying all odds at the moment and once again has jumped against the US dollar in yesterday’s trading session and has now rallied more than 130 points since hitting a 20-month low only 4 days ago.
The catalyst yesterday may have been the better than expected Eurozone unemployment figure which hit the market at 7% while across the Atlantic, US ISM manufacturing PMI figures for January showed manufacturing activity growth at its weakest level since November 2020, with problems related to Covid 19 such as labour shortages and supply chain bottlenecks worsening last month with the spread of Omicron.
Looking ahead on today’s trading session, the main news of the day will come during the European session with the release of CPI figures from the Eurozone which preludes the latest interest rate decision form the ECB due to come out tomorrow.
All in all, this week, we have seen some pretty positive economic numbers from Europe and a strong round of CPI figures should see the Euro remain well supported, at least until tomorrow’s rate decision.
On the chart today, we can see that the EUR/USD currency pair is taking a breather and is currently stuck in around a 10-point trading range as near $1.1274 as we enter the European session.
The rebound in the Euro this week has been based mainly on predictions that the European Central Bank will finally change their tune with regards to potential rate hikes and although no moves are expected in tomorrow’s decision, expectations are growing that the following monetary statement will be more bullish with regards to tightening monetary policy.
If this turns out to be a false flag, and the ECB stick to the status quo by vowing to keep interest rates on hold for longer, the Euro is likely to suffer a sharp pullback to the $1.1200 support level which was formed in November of last year.
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