- During yesterday’s trading session, the EUR/USD pair tried to recover upwards, but its gains did not exceed the 1.0435 level before falling back to 1.0335 at the time of writing this analysis.
- This comes ahead of the release of minutes from the US Federal Reserve’s latest meeting, during which the bank changed the market’s outlook for future US interest rate cuts in the new year.
Inflation in the Eurozone is stronger than expected
According to reliable trading platforms, the euro got a positive boost from stronger-than-expected Eurozone inflation data. According to economic calendar data, annual inflation in the Eurozone accelerated to 2.4% in December, the highest level since July, from 2.2% in November, in line with market expectations. This was the third consecutive monthly increase, which reinforced the view that the European Central Bank will cautiously approach interest rate cuts.
In the same context, higher-than-expected inflation data from Germany and Spain boosted this sentiment, even as France and Italy posted weaker inflation numbers. Meanwhile, the market remained focused on US President Trump’s tariff plans, as he dismissed claims that his administration could adopt more moderate trade measures.
Trading Tips:
Dear Follower, the performance of the Euro Dollar will remain weaker until Trump is inaugurated and his policies towards the US and global economy become clear.
American stock indexes are stabilizing
In today’s session, and via equity trading platforms, US stock futures stabilized after a sharp sell-off in yesterday’s trading session, following a rise in Treasury yields. Yesterday, the Dow Jones index fell by 0.42%, the S&P 500 index fell by 1.11%, and the Nasdaq Composite by 1.89%. These losses came after the latest ISM services data showed an acceleration in activity and rising prices, raising concerns about persistent inflation and dampening expectations for further US interest rate cuts by the Federal Reserve.
According to trading, the yield on the US 10-year Treasury rose about 6 basis points to 4.68%, reflecting inflationary expectations and revised prices. In terms of stock performance, Nvidia shares led the decline, falling 6.2% and erasing gains driven by CEO Jensen Huang’s keynote speech at CES about new artificial intelligence and technological advancements. Other large-cap tech stocks, companies focused on artificial intelligence, and cryptocurrency-related stocks also saw significant declines.
The US dollar is stronger ahead of important events
According to Forex trading. The US dollar, which is linked to US economic data, recovered better than expected. US bond yields and the dollar rose after new data confirmed continued inflationary pressures in the US economy, reducing the chances of a US interest rate cut by the Federal Reserve. Apparently, this came after the Institute for Supply Management services PMI survey showed that prices paid by businesses reached the highest level since February 2023. Overall, the market now believes that the Federal Reserve will not cut US interest rates again before July, confirming the “more for longer” thesis on interest rates that has supported the rise of the dollar effective from October 2024.
On the other hand, US JOLTS job vacancies rose to a six-month high of 8.098 million in November, easily beating expectations of 7.740 million and 7.744 million in the previous month. Overall, the US dollar will also remain supported amid market uncertainty over US President Donald Trump’s tariff plans.
Technical analysis of EUR/USD today:
Dear Reader, the performance is moving in line with our expectations that selling EUR/USD from any level up is the best trading strategy and that the factors that weaken the Euro are stronger and may last for some time. A bearish return to the EUR/USD pair towards the support levels of 1.0300, 1.0245 and 1.0180 will bring the EUR/USD parity closer and at the same time will move all technical indicators towards oversold levels, guided by the relative strength index and the MACD. Conversely, and during the same timeframe, the daily chart will have the 1.06 level as the first target to break the current downtrend barrier.
Ready to trade our daily Forex analysis and predictions? Here are the best European brokers to choose from.