Overview of EUR/USD Performance
The recent expansion in the Eurozone economy was a major factor in the Euro’s victory against the US Dollar on Friday. A seven-month high of 50.3 was recorded in January by the most recent S&P Global Composite Purchasing Managers Index for the Eurozone, beating both December’s reading of 49.3 and the initial reading of 50.2. The indicator was also over the critical 50 level for the first time in seven months, suggesting economic expansion as opposed to recession.
Economic Indicators for EUR/USD
The fourth quarter of 2022’s statistics revealed a 0.1% growth in the Eurozone’s economy, against predictions of a 0.1% loss. These figures may not be remarkable, but they do provide some hope that the currency region might avoid a recession.
The European Central Bank made a suggestion that there would be another hike next month, although this was expected by the market. These days, a big surprise is needed to strengthen a currency, and neither the meeting nor the events that followed provided that.
The EUR/USD has been steadily increasing since September 2022 and is currently back at its April highs. With important economic data being released in the United States, including the monthly employment report, the USD is predicted to gain momentum for the remainder of the day.
Market Analysis for EUR/USD
The market broke above it intraday on Wednesday and Thursday of this week, putting the wide uptrend channel that began in September 2022 to the test on the upside. The wide channel’s bottom barrier is no longer significant due to the continued bullish trend. When it was last checked on November 3rd, a strong upward bounce occurred.
There is also a tighter channel visible, although its downside was more recently tested on January 6. This channel may offer support at 1.0561 if the Euro bulls lose their momentum. However, if they continue, considerable resistance might appear above 1.11556, which was the most recent high above present levels.
A split market is evident from the IG sentiment statistics, with 58% of transactions being pessimistic. The EUR/USD may not collapse precipitously as a result of this, but it does indicate that the current uptrend may not yet see a clear break higher. The end of the week can yield insightful information.