EUR/USD testing 1.08 ahead of Fed meeting
2023.01.31 14:46
EUR/USD testing 1.08 ahead of Fed meeting
Budrigananalytics – Despite better-than-expected growth data from the Eurozone, the pair trades slightly lower on Tuesday, as market sentiment remains cautious ahead of central bank meetings this week.
The EUR/USD pair rebounded from a two-week low of 1.0802 earlier in the day to trade at 1.0835 at the time of writing, or 0.12% below its opening price. In the meantime, the dollar, as measured by the, has outperformed its competitors for the past four days, winning at the 102.40 level.
According to preliminary GDP figures released by Eurostat on Tuesday, the economy expanded by 0.1 percent in the final quarter of 2022, slightly exceeding expectations of stagnation and slowing from the previous reading of 0.3 percent in Q3. The block’s annual growth rate was 1.9% in the fourth quarter, compared to 2.3% in Q3, exceeding the 1.8% expected rate.
In addition, December Retail Sales data were released by the Federal Statistics Office of Germany. These figures showed an annual decrease of 6.4%, which was lower than the expected decrease of 4.3%).
The Federal Reserve’s decision on Wednesday and the ECB’s announcement on monetary policy on Thursday continue to attract investors’ attention. The first raises the main rates by 25 basis points, while the second raises them by 50. In light of this, the nervousness leading up to the meetings is helping the dollar.
Despite the current pullback, which is being viewed as merely corrective for the time being, the EUR/USD maintains a bullish short-term bias from a technical perspective. Even though most of the indicators on the daily chart have turned negative, they are still in positive territory, and the price is just above the 20-day Simple Moving Average (SMA).
The 20-day moving average (SMA) provides psychological support at the 1.0800-1.0790 zone, which serves as the immediate support level. The mid-January lows in the 1.0720 region follow. In contrast, the psychological area of 1.1000 and the nine-month peak of 1.0929 constitute the subsequent resistance level.
