EUR/USD Price Forecast – Euro Continues to Power Higher Ahead of FOMC

Christopher Lewis
Updated: Feb 1, 2023, 15:30 GMT+00:00

The Euro has rallied again during the trading session on Wednesday, as we are heading towards the FOMC meeting statement and press conference.

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EUR/USD Forecast Video for 02.02.23

Euro vs US Dollar Technical Analysis

The Euro has rallied a bit during the trading session on Wednesday, as we are awaiting the FOMC decision and press conference. At this point, the market is very likely to continue seeing a lot of noise, as traders are trying to figure out whether or not the Federal Reserve is going to stay as tight for as long as they say they are. At this point, I suspect that we have a situation where we are getting close to the absolute peak of this behavior, mainly due to the fact that I heard a pundit on CNBC yesterday suggests that the market doesn’t care what the Fed does, because they will do whatever the data tells them. Ironically, the data still shows extreme inflation.

Yes, inflation is starting to drop in the United States, but it’s nowhere near where it needs to be. Furthermore, the Federal Reserve has had a major problem with its credibility over the last 14 years, as Wall Street has continued to bully it. It is essentially a situation where the Federal Reserve must regain its credibility, and the only way it’s going to do it is to actually do what it says for once. Keep in mind that Federal Reserve officials can no longer trade the markets, so they don’t have a vested interest in trying to inflate the bubble anymore.

In other words, I think this is a situation where the only thing that matters will be whether or not the Federal Reserve can get its message across. So far, they’ve been miserable about it but if they don’t get a handle on it now, they may never. Breaking down below the hammer from the Tuesday session sends in a flood of selling, perhaps down to the 1.06 level. On a significant new high, then the market is likely to test the 1.10 level, and after that the dollar will be in serious trouble.

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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