EUR/USD Current price: 1.2410
- US Secretary Mnuchin nailed the dollar's coffin by celebrating a weaker USD.
- ECB's meeting up next: no changes expected but Draghi expected to express concerns about stronger EUR.
The EUR/USD pair up roared to a fresh multi-year of 1.2411 during US trading hours, as the greenback got smashed by US political turbulence. After a three-day Government shutdown, Trump announced a series of tariffs, aimed to protect American companies from cheap foreign exports, triggered Chinese "strong dissatisfaction" on words of the Chinese Commerce Ministry, although the measures affect the world's largest economy relationship with multiple trade partners. Trump's inclination toward protectionism is no news, but this is indeed is a strong measure that puts the USD one step further away from any chance of strengthening. US Treasury Secretary Mnuchin said that a weaker dollar is good for US trade, adding fuel to the fire.
This Wednesday, the release of the EU January preliminary Markit PMIs showed that the services sector started the year with a strong footing, beating expectations and leading to an over 11-year peak in the composite index for the region of 58.6, up from the previous 58.1. The manufacturing sector grew by less-than-expected according to the same report, but activity holds near record levels. In the US, the situation inverted, as the manufacturing index resulted at 55.5, beating expectations of 55.0, while the service sector lagged, with the index down to 53.3 from the previous 53.7, also below market's forecast. However, the worst surprise came from US Existing Home Sales that fell by 3.6% in December, against a 2.2% drop expected. Investors' attention this Thursday will center on the ECB's monetary policy meeting, with the bank largely expected to maintain the status-quo and attempt to control somehow EUR's strength.
The technical picture is bullish ahead of Asian opening, with the pair holding near the mentioned multi-year high, and despite extreme overbought readings and the upcoming risk event. The 4 hours chart shows that the price has moved well above a now bullish 20 SMA, while technical indicators have reached overbought territory before losing upward strength, anyway consolidating, far from signaling a possible correction ahead. Higher highs are likely for the upcoming sessions, with 1.2460 becoming a possible short-term target. Profit-taking ahead of ECB's meeting is not out of question for late Asia/early Europe.
Support levels: 1.2370 1.2325 1.2280
Resistance levels: 1.2425 1.2460 1.2500
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.