EUR/USD falls due to weak data on Germany
2023.01.31 09:16
EUR/USD falls due to weak data on Germany
Speculators don’t want to play any breakout games ahead of an important FOMC rate tomorrow, which is why stocks fell in the last few sessions. Lower than usual, we’ve seen some interesting reversals; even gold and are trading downward, indicating that risk-off is taking place, supporting the USD. Additionally, the outcome was -5.2%, in contrast to expectations of -0.1%. so is going aggressively lower, fueling dollar longs even more.
The markets will be primarily influenced by the ECB, FED, and BoE during the coming week. Since the ECB has been very hawkish in recent statements, it is not surprising that EUR/USD rose in January. However, given that many CB actions have already been priced in, we are aware of the possibility of a significant surprise on the EUR as economic data weakens.
What if the European Central Bank (ECB) falls short on Thursday and attempts to be more cautious with rates at subsequent meetings? Then, when we take into consideration the plans of the BoC and possibly the FED, I believe that EUR/USD will aggressively retrace its decline. But it has nothing to do with what they are doing now; It’s about what their message will be for the decisions they make in the next meetings.
After the completion of an ending diagonal, we see EUR/USD trying to come much lower from an Elliott wave perspective. However, keep in mind that these patterns result in a sharp reversal, so a genuine sell-off may not have begun. When the price is trading below 1.09, I see bearish intraday flows for 1.07-1.075. 1.10 requires a break above 1.09.
