- EUR/USD is trading slightly above the 200 day EMA, a magnet for bears.
- Better-than-expected US labor market data justifies further rate hikes by the Fed.
- ECB policymakers are split between aggressive or gradual tightening.
- EUR/USD Price Analysis: If the pair breaks below the 200 DMA, it would pave the way towards 1.0400.
He EUR/USD is unchanged at 1.0545, below the 200-day EMA, as Fed Chairman Jerome Powell testifies before the US Congress. Meanwhile, US stocks continued to trade, showing mixed sentiment, while the dollar turned positive. At the time of writing, the EUR/USD pair is trading at 1.0545.
EUR/USD holding firm around known levels in the absence of a catalyst
EUR/USD has failed to gain traction in any sense after US economic data supported Jerome Powell’s latest comments. Although the January JOLTs report showed a decline in opens of 10.8 million, it beat estimates of 10.5 million.
Earlier, the February ADP Employment Change report revealed that the US private sector added 242,000 jobs, more than the 200,000 expected. That said, the numbers in both reports reinforced what Federal Reserve officials have been saying about a tight labor market, which would justify further tightening by the Fed. This could weigh on the euro (EUR); therefore, a further pullback of the EUR/USD pair is expected.
Before the Wall Street open, Richmond Fed President Thomas Barkin commented that inflation remains high and the Fed still has work to do. Later in the US House of Representatives, Fed Chairman Jerome Powell said the Fed had not yet decided on the next March meeting. Powell added that China’s reopening could spur another round of inflation due to rising commodity prices.
In the euro zone (EU), monetary policy makers at the European Central Bank (ECB) have maintained a hawkish stance. Earlier in the week, the ECB’s Knot said the central bank needs to keep raising rates for some time, echoing Robert Holzmann’s words to raise rates 50 basis points due to stubborn inflation.
Ignazio Visco, member of the Governing Council (GC) of the ECB, commented that monetary policy should continue to be prudent and driven by economic data, favoring gradual rate hikes. Meanwhile, an ECB survey shows that EU consumers expect inflation to moderate and wages to rise. Meanwhile, Citigroup expects the ECB to raise rates to 4% by mid-2023.
EUR/USD Technical Levels
EUR/USD is biased neutral, although it is about to test the 200 day EMA. Tuesday’s dip below the 100 day EMA at 1.0554 exacerbated a decline towards the 200 day EMA, which is seen as a trending level for EUR/USD traders. A decisive break below 1.0536, the 200 day EMA would accelerate the EUR/USD pair’s decline towards 1.0500. Once broken, the next support would be the year low at 1.0482, followed by the November 30 low at 1.0290.
What is there to watch out for?
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
