EUR/USD: Federal Reserve’s Next Move Keeps Investors on Edge, EUR/USD Retreats

Short Position

• Take Profit: 1.0500
• Stop Loss: 1.0865
• Timeline: 1-2 days

Long Position

• Buy Stop: 1.0785
• Take Profit:1.0865
• Stop Loss: 1.0650

The sentiment among investors is shifting as they await the Federal Reserve’s next move. The US dollar index has risen above $103 while the EUR/USD pair has dropped near its lowest point of the year, pulled back by 2.75% amid risk-off sentiment. The drop in the EUR/USD pair can be attributed to the risk-averse attitude among investors, which intensified after the Federal Reserve adjusted its interest rate hike policies by 0.25% on Wednesday, following a 0.50% increase in its December meeting.

The main concern among investors is the tight labor market and rising wages leading to elevated inflation. Fed Chair Jerome Powell confirmed these fears, stating the tight labor market was a hindrance to disinflation. There are no major economic data releases from the US today. The only data to watch is the preliminary German inflation data, expected to rise 0.8% in January. Technically, the EUR/USD pair is consolidating, with a potential break below 1.0710 opening the possibility of moving to the support at 1.0500.

Forex Forecast

• • EUR/USD: The Euro has been losing ground against USD.
  • EUR/JPY: The pair may continue to consolidate for now.
  • AUD/USD: More rate hikes as inflation puts pressure on RBA
  • XAU/USD: XAU/USD is intersecting in the face of a probable Bull Cross and a negative RSI.
  • GBP/USD: Early European trading is witnessing the US currency advance much further.
  • USD/CAD: BofA expects a downward shift for the pair by year end.
  • USD/CHF: The downtrend may prevail for the USD/CHF pair.
  • USD/JPY: The USD/JPY fell after a strong surge leading up to the New York close.
  • BTC/USD: Bitcoin prices decline after yet another week of high impact economic data.
  • ETH/USD: The Ethereum pair may see a bullish breakout.

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