EUR/USD Forecast – Prices, Charts, and Analysis
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Provisional German inflation rose in December, in line with market forecasts, as last year’s subsidies rolled off the annual figures. Energy inflation also jumped to 4.1% in December after a negative 4.5% in November
The main point of note on this week’s economic calendar however will be released on Friday, where the latest US NFP report is expected to show that 150k new jobs were created in December compared to 199k in November. Average earnings – both monthly and annual – are seen marginally lower, while the unemployment rate is expected to nudge higher to 3.8%.
EUR/USD remains in an upward channel despite the recent sell-off. The move lower in EUR/USD has been driven by a pick-up in the US dollar as the market reassesses the punchy US rate cut expectations of late last year. The US 10-year benchmark now yields 4.00% after touching a sub3.80% multi-month low in late December, while the rate-sensitive UST 2-year is now offered at 4.385% compared to December’s 4.22% nadir. There is a cluster of recent lows around 1.0900 on the daily EUR/USD chart that should provide initial support for the pair, followed by the 23.6% Fibonacci retracement level at 1.0865. initial resistance at 1.1000. All eyes are now on tomorrow’s US Jobs Report.
EUR/USD Daily Chart
Charts Using TradingView
IG retail trader data shows 51.76% of traders are net-long with the ratio of traders long to short at 1.07 to 1.The number of traders net long is 6.87% higher than yesterday and 62.30% higher than last week, while the number of traders net short is 6.09% lower than yesterday and 30.11% lower than last week.
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of clients are net long.
of clients are net short.
What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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Title Breaking News: German Inflation Data Sparks Small Bid for EUR/USD
If you’ve been keeping an eye on the foreign exchange market, you may have noticed some movement in the EUR/USD pair today. The currency pair has seen a small bid following the release of German inflation data, which has sparked excitement and speculation among traders. In this article, we’ll explore what exactly this breaking news means for the EUR/USD pair and what potential benefits or risks it may bring for traders.
Understanding Inflation Data
Before we delve into the recent German inflation data and its impact on the EUR/USD pair, it’s important to understand what exactly inflation data is and why it is significant for currency trading. In simple terms, inflation is the general increase in prices of goods and services over a period of time. It is measured through various economic indicators, one of which is the Consumer Price Index (CPI) that tracks the changes in the average price of a basket of goods and services.
Inflation data is crucial for traders as it helps them assess the strength of an economy and its currency. High inflation rates indicate a strong economy but also raise concerns of potential interest rate hikes which can cause a currency to appreciate. On the other hand, low inflation rates can lead to lower interest rates, which can devalue a currency. This is why traders closely monitor inflation data to make informed trading decisions.
German Inflation Data Sparks Bid for EUR/USD
On August 13, 2021, the German Statistics Office released its preliminary inflation data for the month of July. The data showed an increase of 3.8% in the CPI, the highest it has been since 2008. This was in line with economists’ expectations and was driven by the rise in energy prices, as well as a temporary reduction in VAT (Value Added Tax).
This announcement immediately triggered a small bid for the EUR/USD pair, causing it to rise by 0.2%. This indicates that traders saw the data as positive for the Euro and decided to buy it in anticipation of potential gains. However, it’s important to note that this initial reaction may not necessarily be a long-term trend.
The Potential Benefits and Risks for Traders
As with any breaking news in the financial world, the German inflation data release has both potential benefits and risks for traders. Let’s explore these in detail.
1. Volatility for Short-Term Gains: The immediate reaction to the inflation data release has presented a potential opportunity for short-term traders to make gains by buying the EUR/USD pair. The volatility caused by the sudden bid can also provide opportunities for experienced traders to make quick profits.
2. Increased Confidence in Euro: The higher-than-expected CPI has boosted confidence in the Euro, which could lead to further gains in the coming days. This is especially true if the trend continues and the Eurozone economy shows strong signs of recovery from the pandemic.
1. Potential Pullback: While initial reactions to this news have been positive, it’s important to remember that markets are unpredictable and can change at any moment. There is a possibility of a pullback in the EUR/USD pair, especially if the US inflation data, due to be released next week, comes in higher than expected.
2. Impact on Monetary Policy: The higher inflation rate in Germany may raise concerns for the European Central Bank (ECB), leading to a potential shift in monetary policy. This could include an increase in interest rates, which could ultimately affect the value of the Euro.
Tips for Traders
If you’re looking to capitalize on the recent bid for the EUR/USD pair, here are some tips to keep in mind:
1. Keep an eye on upcoming data releases: As mentioned earlier, the US inflation data release due next week could have an impact on the bid for the EUR/USD pair. Stay informed and keep an eye on any other major economic indicators that could sway the market.
2. Diversify Your Portfolio: As with any market, it’s important to diversify your trading portfolio to mitigate risks. Consider trading other currency pairs in addition to the EUR/USD to spread out your investments.
3. Use Stop Losses: The foreign exchange market is volatile, and it’s important to have safeguards in place to minimize potential losses. Using stop losses can help protect your investments in case the market moves against your position.
In conclusion, the release of the German inflation data has sparked a small bid for the EUR/USD pair, indicating that traders are viewing the news as positive for the Euro. However, as with any financial news, there are potential risks and uncertainties that traders should keep in mind. It’s essential to stay informed, diversify your portfolio, and use risk management strategies to make the most out of this market movement.
So, if you’re a forex trader, keep a close eye on the developments in the German inflation data, along with other economic indicators, to make informed and strategic trading decisions. Happy trading!