EUR/USD Forecast – Euro Continues to Dance Around 1.09

Christopher Lewis
Published: Jan 26, 2023, 15:00 GMT+00:00

The Euro has dropped initially during the trading session on Thursday but found buyers after the GDP numbers came out of the United States.

Euro, FX Empire

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EUR/USD Forecast Video for 27.01.23

Euro vs US Dollar Technical Analysis

The GDP numbers came out basically as anticipated in the United States, although when you dug through the numbers, you realize that a lot of the orders that made up GDP were aircraft, and not necessarily economic strength. Because of this, traders are back on the idea that the Federal Reserve will have to pivot sooner rather than later. Whether or not that’s true remains to be seen, but it is worth noting that we have a Federal Reserve meeting next week. If they raise interest rates only 25 basis points, that might be the final nail in the coffin. However, if Jerome Powell goes out of his way to prove how hawkish he is, and they raise 50 basis points, that could send the dollar screaming higher against most currencies.

Regardless, when I look at this chart, I recognize that we are a little overdone, but let’s face it here, we were overdone on the way down as well. When I look at this chart, I recognize that most pullbacks will probably be thought of as opportunities to pick up “cheap euros”, as the ECB reiterates its desire to raise interest rates.

Having said that, there was a comment earlier in the day that although they plan on raising rates, they have no idea where the terminal rate is, and this of course will lead to more confusion which seems to be what central bankers want, as over the last couple of years where we’ve had “central-bank transparency, it seems like things have actually gotten worse. Nonetheless, I do believe that we will eventually hit the 1.10 level.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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