EURUSD: USD weakness further?
One of the important events during the previous week was Fed Chair Powell`s testimony in front of the Senate Banking Committee. It revealed Fed`s expectations on cutting interest rates at “some point” during this year. This was important information for the markets, as they received a glimpse of the potential Fed`s moves during the course of this year. This was also a confirmation of the market expectations for some time now. At the same time, unemployment rate in February was increased to the level of 3.9%, above market estimate of 3.7%, while the non-farm payrolls for February reached 275K, well above forecasted 200K. Increased unemployment in the US was also one of the indicators that the market was waiting to see, as it has a potential to predict a potential slow down in both inflation and the US economy, which would impact Fed's decision on cutting rates. Current odds for rate cut in June are around 80%. From other published US indicators; the US ISM Services PMI for February was standing at 52.6, below market forecast of 53.
ECB left its benchmark interest rates unchanged at 4.5%, which was exactly in line with market expectations. Third estimate of the EU GDP growth rate for Q4 was unchanged from the previous release of 0% on a quarterly basis, and 0.1% on a yearly basis.
The final confirmation of market expectations that the Fed might cut interest rates during the course of this year pushed the USD to the lower grounds. Currency pair started the week by testing the 1.08 support line, but it soon started its path toward the highest weekly level at 1.098. Resistance line at 1.10 has not been tested during the previous week. The RSI reached the level of 67 which is quite close to the overbought market side. Moving average of 50 days continues to converge toward the MA200, and with a small distance between lines, the cross might easily occur in the future period.
Charts are showing that the USD clearly started its weakening path. The market is currently positioning for Fed's rate cut, which might impact further weakening of the USD in the coming period. This conclusion is based on economic theory and also historical USD moves during the time of Fed`s so-called pivoting point. Still, for the week ahead, the currency pair might test the resistance line at 1.10, with a potential for a quite short reversal toward the 1.09 level.
Important news to watch during the week ahead are:
Euro: Inflation Rate final for February for Germany,
USD: Inflation rate for February, PPI for February, Retail Sales for February, Michigan Consumer Sentiment preliminary for March.
ECB left its benchmark interest rates unchanged at 4.5%, which was exactly in line with market expectations. Third estimate of the EU GDP growth rate for Q4 was unchanged from the previous release of 0% on a quarterly basis, and 0.1% on a yearly basis.
The final confirmation of market expectations that the Fed might cut interest rates during the course of this year pushed the USD to the lower grounds. Currency pair started the week by testing the 1.08 support line, but it soon started its path toward the highest weekly level at 1.098. Resistance line at 1.10 has not been tested during the previous week. The RSI reached the level of 67 which is quite close to the overbought market side. Moving average of 50 days continues to converge toward the MA200, and with a small distance between lines, the cross might easily occur in the future period.
Charts are showing that the USD clearly started its weakening path. The market is currently positioning for Fed's rate cut, which might impact further weakening of the USD in the coming period. This conclusion is based on economic theory and also historical USD moves during the time of Fed`s so-called pivoting point. Still, for the week ahead, the currency pair might test the resistance line at 1.10, with a potential for a quite short reversal toward the 1.09 level.
Important news to watch during the week ahead are:
Euro: Inflation Rate final for February for Germany,
USD: Inflation rate for February, PPI for February, Retail Sales for February, Michigan Consumer Sentiment preliminary for March.
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