US Dollar Forecast: EUR/USD Snaps Back Ahead of January Low

US Dollar Outlook: EUR/USD

EUR/USD snaps back ahead of the January low (1.0178) to extend the rebound from the weekly low (1.0211), and the exchange rate may appreciate over the remainder of the week as it carves a series of higher highs and lows.

US Dollar Forecast: EUR/USD Snaps Back Ahead of January Low

It seems as though EUR/USD will no longer respond to the negative slope in the 50-Day SMA (1.0419) after trading above the moving average for the first time since October, and the exchange rate may continue to retrace the decline from the January high (1.0533) as the unexpected downtick in the ISM Services survey warns of a slowing economy.

Join David Song for the Weekly Fundamental Market Outlook webinar.

In response, the Federal Reserve may further unwind its restrictive policy in 2025 to prevent a recession, and the central bank may retain the current course for US monetary policy as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent’ at the end of this year.

US Economic Calendar

Nevertheless, the update to the US Non-Farm Payrolls (NFP) may keep the Federal Open Market Committee (FOMC) on the sidelines as the economy as anticipated to add 170K jobs in January, while the Unemployment Rate is expected to hold steady at 4.1% during the same period.

With that said, signs of a strong labor market may generate a bullish reaction in the US Dollar as it encourages the Fed to keep US interest rates on hold at its next meeting in March, but a weaker-than-expected NFP report may keep EUR/USD afloat as it fuels speculation for lower US interest rates in 2025.

With that said, the opening range for February remains in focus for EUR/USD as it extends the advance from the start of the week, but the exchange rate may struggle to extend the bullish price series should it fail to test the January high (1.0533).

EUR/USD Chart – Daily

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

EUR/USD bounces back ahead of the January low (1.0178) to trade back above 1.0370 (38.2% Fibonacci extension), with a break/close above the 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension) zone bringing the January high (1.0533) on the radar.
A break/close above the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) region opens up the December high (1.0630), but EUR/USD may snap the bullish price series if it struggles to hold above 1.0370 (38.2% Fibonacci extension).
Failure to defend the monthly low (1.0211) may lead to a test of the January low (1.0178), with a close below 1.0200 (23.6% Fibonacci retracement) raising the scope for a move towards parity.

Additional Market Outlooks

Gold Record High Price Pushes RSI Into Overbought Zone

US Dollar Forecast: AUD/USD Vulnerable amid Threat of Trade War

USD/CAD Clears 2020 High as Trump Tariff Looms

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

--- 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.