EURUSD will be ready to 1.1150 after the NFP!
On EUR/USD, I am observing a complex interplay of economic indicators and market sentiment shaping its recent performance. Thursday saw the pair on a positive trajectory, trading around 1.0950. This movement is supported by a mix of data from the United States and Europe, reflecting the intricate nature of forex market dynamics. Starting from the European side, Germany's December annual CPI inflation rose to 3.7%. This is significant as it indicates a price increase within one of the largest economies in the eurozone. Typically, higher inflation might prompt a central bank, in this case, the European Central Bank (ECB), to consider tightening monetary policy to control rising prices. Such actions usually strengthen the currency as higher interest rates attract investors looking for better returns. Shifting focus to the United States, the ADP Employment Report showed that private wages increased by 164,000. Employment data are a crucial indicator of economic health, and robust job growth often signals a strong economy. This, in turn, influences the policy decisions of the Federal Reserve. Interestingly, despite these positive data, the EUR/USD pair managed to climb, suggesting other factors were at play. One of these is the minutes from the Federal Open Market Committee (FOMC), hinting at an upward trend. The minutes suggested that while rates will peak during this tightening cycle, the future path will heavily depend on economic developments. Additionally, the rise in U.S. yields across various maturities, following the hawkish stance of the FOMC, did not prevent the EUR/USD from rising. This could be due to the fact that, simultaneously, higher-than-expected inflation figures in Germany might strengthen the notion that the ECB will maintain a tight policy stance, making the euro relatively more attractive. It will be interesting to observe any developments tomorrow with the release of the NFP data. Greetings and happy trading to all from Nicola.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.