- Investors have been eagerly awaiting the US GDP report.
- The ECB will likely keep interest rates stable.
- Markets now say there is a 43% chance the Fed will cut rates in March, a notable drop from 88% a month ago.
The outlook for EUR/USD turned slightly more bullish on Thursday, showing strength in the pair ahead of the important European Central Bank policy meeting. Additionally, there were expectations for the US GDP report which may give clues as to the potential direction of US interest rates.
–Want to learn more about Forex options trading? Check out our detailed guide –
The ECB will likely keep interest rates stable. However, investors will be keeping an eye on the strength of the authorities’ resistance to expectations for rate cuts. Market participants expect the ECB to cut interest rates by 130 basis points throughout the year. The ECB ended its fastest rate hike cycle in September. However, policymakers say it is too early to discuss interest rate cuts.
Meanwhile, markets expect the Fed to maintain its current stance in the US next week. However, the focus will be on Chairman Powell’s comments. The market currently shows a 43% chance of a rate cut in March, a notable drop from 88% a month ago. At the same time, traders are pricing in a 134 basis point (bp) rate cut this year, up from 160 basis points (bp) at the end of 2023.
The dollar rose about 2% this month as traders sharply dialed back hopes for a deep Fed rate cut soon. The change follows hawkish comments from policymakers. Additionally, recent data has highlighted the resilience of the U.S. economy.
Notably, Wednesday’s data revealed an increase in US business activity accompanied by a decline in inflation indicators. The prices companies charge for their products have fallen to their lowest levels in more than three-and-a-half years.
Today’s major events in EUR/USD
- ECB monetary policy meeting
- US gross domestic product
- Number of initial unemployment claims in the US
EUR/USD technical outlook: flat around 1.0900
The pair is moving sideways on the chart and is caught near the key level at 1.0900. The price is below the 30-SMA, indicating a range. However, on a larger scale, the trend is shown to be bearish as price cuts lower lows and higher highs. Additionally, prices have consistently made impulsive and corrective movements.
– If you want to know about scalping forex brokers, read our guidelines to get started –
At the moment, EUR/USD is in a corrective movement. Given the larger bearish bias, the next move could be a bearish impulsive leg. Therefore, the price may fall to the support at 1.0800 soon.
Looking to trade Forex now? Invest with eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
