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EURUSD Faces Downward Pressure Amid Strengthening US Dollar-TraderFactor

EURUSD Faces Downward Pressure Amid Strengthening US Dollar

EURUSD pair has taken a downward turn, heading toward 1.0750 during the European trading session on Friday. This shift is largely due to a slight increase in the strength of the US Dollar. Market attention now turns towards impending US CPI revisions, along with statements from the European Central Bank (ECB) and the Federal Reserve, which could provide new trading incentives.

EURUSD Intraday: Strengthening Trend Line Signals Buying Opportunity

The EUR/USD pair, currently trading below 1.0800, is showing signs of a potential uptick, supported by a rising trend line observed in the intraday market. Despite modest losses in the European session on Friday due to a slight increase in the US Dollar, the pair’s resilience remains evident as it holds above the 1.0722 support level. This intraday bias towards neutrality, coupled with the Relative Strength Index (RSI) advocating for further upside, presents a promising buying opportunity.

EURUSD Daily Chart

EURUSD Daily Chart

The recommendation for this asset is a BUY entry at the pivot price of 1.0765. With a risk limit set at 2% per trade, the target and take profit levels are projected at 1.0790 and 1.0805 respectively.

US Dollar Outperforms Amid Lower Jobless Claims

The US Dollar showed strong performance on Thursday, outpacing its rivals as the yield for the benchmark 10-year US Treasury bond rose. This followed a report from the Department of Labor indicating a decrease in Initial Jobless Claims to 218,000 for the week ending February 3rd, down from 227,000 the previous week. Despite this, further gains were limited, allowing the EUR/USD to minimize its losses as Wall Street’s main indexes remained steady.

ECB Comments Support The Euro

Statements from officials at the European Central Bank (ECB) appear to be lending support to the Euro. ECB policymaker Martins Kazaks expressed pessimism about a rate cut in Spring, while Governing Council Member Francois Villeroy de Galhau hinted at likely rate cuts later this year. Similarly, policymaker Pierre Wunsch suggested a more cautious approach, favoring waiting for more reassuring wage data before making policy decisions.

Anticipation Ahead of High-Impact Data Releases

Friday’s economic calendar lacks any high-impact data releases, potentially leading to some movement in EUR/USD as the European session draws to a close. However, investors may choose to hold back from making significant moves, keeping the EUR/USD pair within a tight range as they await high-impact fundamentals next week.

Euro Shows Resilience Despite Strong US Data

The Euro has demonstrated resilience, managing to hold its ground against the dollar despite better-than-expected US jobless claims data and strong US Treasury yields. As we head into the weekend, the tug-of-war between the Euro’s resilience and the Dollar’s consolidation is likely to maintain a narrow margin for EUR/USD.

Investors Adopt Wait-and-See Approach

With no high-impact data expected from either the United States or the Eurozone on Friday, investors are likely to adopt a wait-and-see stance. This could keep the currency pair within range until Tuesday’s release of US Consumer Price Index (CPI) data.

The CPI data, a key indicator of inflationary pressures in the US economy, could provide important cues for future moves by the Federal Reserve. A higher than expected reading would be bullish for the USD, while a lower than expected reading could be seen as bearish.

Until then, the market’s focus will likely remain on geopolitical developments and their potential impact on global risk sentiment. As always, investors are advised to monitor the market closely for any unexpected shifts that could influence the EUR/USD dynamics.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.