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Euro strengthened by US dollar decline as market prices rise as Fed rate hikes. Where to go for EUR / USD?

EURO, EUR / USD, US dollar, China, AUD / USD, NOK – topics of conversation

  • The euro strengthening is largely a function of the USD weakness for the time being
  • `ONEC shares followed the lead from the USA with significant losses
  • Stocks and the US dollar are in the crosshairs.W.ill EUR / U.S. dollar turning back?

The euro has continued to rally as the US dollar remains under pressure. Dollar weakness persists as the market appears satisfied that it has reasonably priced in the Fed’s rate hike.

APAC stocks suffered significant losses today, according to the Wall Street tour. The Nasdaq fell 2.51% during the cash session as the reality of higher interest rates began to be realized.

The futures markets have so far shown a stable start for the North American exchanges when they open again today.

Federal Reserve Governor Christopher Waller spoke to Bloomberg after the US close. He reiterated much of what is already known about the Fed’s intentions.

Waller agreed to hike the meeting rate in March, but ruled out a 50 basis point hike for the foreseeable future. He said the Fed Funds policy rate remains their primary vehicle while officials will test returns for their effect at the long end.

President Joe Biden appointed Sarah Bloom Raskin to lead the Federal Reserve’s Regulatory Department. She is seen by commentators as an advocate of tighter banking controls.

Geopolitical news reports that the US is putting pressure on its European allies to investigate possible sanctions against Russia. There are growing concerns that the incident in Kazakhstan – where Russian troops were stationed to contain a large-scale insurrection against the Kremlin-friendly government – could be a precursor to action in Ukraine.

Chinese trade data released on Friday showed imports fell, but exports rose through December, posting a better-anticipated trade surplus of $ 94.46 billion instead of the expected $ 73.95. AUD / USD was a little firmer on the news.

All other G-10 currency pairs rallied against the USD in the Asian session today, with the Norwegian krone being the best performer. They are still supported by high crude oil prices.

Looking ahead, ECB President Christine Lagarde will speak at the same time as the US retail sales release.

EUR / USD technical analysis

EUR / USD has risen significantly in the last few sessions. The clear break above previous resistance at 1.13860 may have created an island low.

This pattern could potentially signal a turnaround. It should be noted, however, that past performance is not an indication of future results.

The 10 and 21 days simple moving averages (SMA) are currently below the price and show positive increases. This could indicate short term bullish momentum as it unfolds.

However, the 100-day long-term SMA remains above the price with a negative gradient and could reach resistance levels. Further up, a pivot point at 1.15133 and previous highs at 1.16164 and 1.16922 are potential resistance levels.

On the downside, the pivot points and previous lows at 1.13860, 1.12738, 1.12277, 1.12219, and 1.11861 could offer support.

diagram C.read in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel use the comments section below or @DanMcCathyFX on twitter

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