EUR/USD Forecast – Euro Pulls Back After PPI

EUR/USD Forecast Video for 12.10.23

Euro vs US Dollar Technical Analysis

The euro initially shot higher during the trading session on Wednesday, but gained back some of the gains as it looks like the PPI numbers came out at 0.5% month over month, instead of the anticipated 0.2%, and year-over-year rose 2.2%, versus the estimated 1.6%. In other words, there is a lot of inflation out there, and therefore it will be interesting to see how this plays out. That being said, some of the reaction may be muted due to the fact that CPI comes out on Thursday, which is something that people pay a bit more attention to in the United States.

That being said, it will be interesting to see how this plays out as the euro is currently dancing around the 1.06 level. This is a large, round, psychologically significant figure, and an area where a lot of people will be paying close attention to. The market breaking down from here could open up and move down to the 1.05 level, and the CPI numbers might be what kicks things off.

Ultimately, this is a market that continues to look for a narrative of hope, so therefore it should be noted that traders in America at least, are trying to find a bullish narrative regardless of what happens. That typically means a softer US dollar, but the reality is that big money seems to look at interest rates much quicker, which of course although having fallen over the last couple of days, the reality is that you still get paid to hold US dollars against the euro.

Furthermore, the euro has to deal with the recession in the European Union, so that doesn’t bode well either. With that being the case, I do think that eventually the selling returns, and if the CPI number on Thursday comes in hot, that could be the catalyst. All things being equal, I think you have to look at this through the prism of the longer-term trend, but also recognize that the erratic and narrative panic driven trading will continue to cause a lot of noisy behavior. In other words, you have to be extraordinarily nimble and get in and out of the market as quickly as possible.

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