EUR/USD falls on mixed EU data and Powell's hawkish tone

  • EUR/USD falters after the 8.9% increase in German factory orders, which contrasts with the 1.1% drop in EU retail sales.
  • The Fed's Powell and Kashkari's hawkish comments adjust expectations for US monetary policy, weighing on the euro.
  • Interest Rate futures show forecasts for a downward reduction in the Fed rate, with an expectation of 113 basis points.
  • Investors will be watching EU Industrial Production data and Fed speeches.

The Euro lost ground against the US dollar early in the North American session, following the release of mixed economic data from the Eurozone (EU) and the hawkish tone from Federal Reserve Chairman Jerome Powell over the weekend. At the time of writing, the EUR/USD pair is trading at 1.0729, down 0.12% on the day.

EUR/USD nears weekly lows as investors cut Fed rate cut estimates, boosting USD

EU data ahead of the New York opener was mixed, as factory orders in Germany beat estimates of 0% and rose 8.9% mom due to an increase in aircraft orders. Meanwhile, a European Central Bank (ECB) survey showed the bloc's households cut their inflation expectations for the next 12 months, as the media expects prices to rise 3.2%, down from 3.5% a year ago. month.

While this is positive news, EUR/USD's rise was capped by a worse-than-expected EU retail sales report, falling -1.1% in December, below estimates of -1%. and the 0.3% expansion in November.

Traders are still digesting a subtle “hawkish” tilt from US Federal Reserve Chair Jerome Powell on Sunday after he said: “the danger of moving too soon is that the job is not quite done.” ” US Treasury yields soared on Monday, while bets on an aggressive US central bank easing cycle had subsided.

Meanwhile, other Fed officials made some hawkish comments. The president of the Minnesota Fed, Neil Kashkari, declared that monetary policy “may not be as restrictive as we would have assumed.” For his part, the president of the Chicago Fed, Austan Goolsbee, stated that he does not rule out a rate cut in March, and stressed that good inflation data could pave the way for easing policy.

In Federal Funds Rate (FFR) futures, traders expect just 113 basis points (bps) of cuts, down from the 168 bps forecast on January 12. Although Powell suggested they would ease policy, he would not come close to market expectations.

For now, US Treasury yields are largely unchanged, while the Dollar, as measured by the US Dollar Index (DXY), is clinging to minimal gains of 0.05%.

The EU agenda will include industrial production figures on Wednesday. In the US, the Fed's main interlocutors will be Loretta Mester, Neil Kashkari and Susan Collins.

EUR/USD Price Analysis: Technical Outlook

EUR/USD plunged and tested the current year-to-date low of 1.0723 twice after breaking a key support trend line drawn from the October 2023 lows that passed around the 1.0740/60 range. Another daily close below that level could pave the way to challenge the 1.0700 figure. A new pullback is seen at 1.0656 on November 10, followed by the November 1 swing low at 1.0516.

On the bullish side, if buyers reclaim 1.0760, they could reclaim the 100-day moving average (DMA) at 1.0783. The next level would be 1.0800.

EUR/USD

Overview
Latest price today 1,073
Today Daily Change -0.0013
Today's daily variation -0.12
Today's daily opening 1.0743
Trends
daily SMA20 1.0874
daily SMA50 1.0907
SMA100 daily 1.0783
SMA200 Journal 1.0838
Levels
Previous daily high 1.0788
Previous daily low 1.0723
Previous weekly high 1.0898
Previous weekly low 1,078
Previous Monthly High 1.1046
Previous monthly low 1.0795
Fibonacci 38.2% daily 1.0748
Fibonacci 61.8% daily 1.0763
Daily Pivot Point S1 1.0715
Daily Pivot Point S2 1.0687
Daily Pivot Point S3 1.0651
Daily Pivot Point R1 1.0779
Daily Pivot Point R2 1.0815
Daily Pivot Point R3 1.0843

Source: Fx Street

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