EUR/USD Pulls Back Ahead of December High

Euro Outlook: EUR/USD

EUR/USD starts to carve a series of lower highs and lows as it slips to a fresh weekly low (1.0360), and the exchange rate struggle to retain the rebound from the monthly low (1.0178) as it pulls back ahead of the December high (1.0630).

EUR/USD Pulls Back Ahead of December High

Looking ahead, the opening range for February is in focus for EUR/USD amid the kneejerk reaction to the European Central Bank (ECB) meeting, and it seems as though the Governing Council will retain the current course for monetary policy as ‘we expect inflation to fluctuate around its current level in the near term.’

Join David Song for the Weekly Fundamental Market Outlook webinar.

Euro-Area Economic Calendar

In turn, the update to the Euro Area Consumer Price Index (CPI) may encourage the ECB further unwind its restrictive policy as the core rate is expected to narrow to 2.6% in January from 2.7% per annum the month prior, and signs of slowing inflation may drag on the Euro as it fuels speculation for lower interest rates.

With that said, EUR/USD may continue to give back the rebound from the monthly low (1.0178) should the bearish price series persist, but the exchange rate may stage further attempts to test the December high (1.0630) as it no longer responds to the negative slope in the 50-Day SMA (1.0424).

EUR/USD Chart – Daily

Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView

EUR/USD starts to carve a series of lower highs and lows as it extends the weakness from earlier this week, with a close below 1.0370 (38.2% Fibonacci extension) raising the scope for a move towards 1.0200 (23.6% Fibonacci retracement).
A breach below parity opens up 0.9950 (50% Fibonacci extension), but lack of momentum to close below 1.0370 (38.2% Fibonacci extension) may curb the recent decline in EUR/USD.
Need a move above the 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension) zone for EUR/USD to snap the bearish price series, with a breach above the monthly high (1.0533) bringing the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci extension) region on the radar.

Additional Market Outlooks

GBP/USD Holds Below 50-Day SMA Ahead of BoE Rate Decision

Gold Price Rallies to Fresh Record High amid Limited Response to Fed

USD/CAD Unfazed by BoC Rate-Cut Ahead of Fed Decision

AUD/USD Susceptible to Negative Slope in 50-Day SMA

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.