EUR USD Forex Analysis - Baxia Markets

EURUSD +0.41%


The EURUSD reclaims parity during the trading session after the Euro Area Inflation Rate came out higher than expected; analysts anticipated a 9% rate, but the actual figure was 9,1%, helping the EURUSD go above $1 as it shows solid economic activity in the EU.

Consumer Price Index in the Euro Area came out slightly short of the analyst's expectations with 117.78; the consensus was at 117.80.

Our Economic Calendar indicates that tomorrow the EU will release S&P Global Manufacturing PMI, which gauges economic trends in the manufacturing sector. Analysts anticipate a 49.7; a figure below 50 indicates a contraction in the manufacturing activity, which would affect the exchange rate of the EURUSD pair.

Later in the session, the US will release Jobless Claims; they are expected to come out higher than the previous; however, we have been surprised by the strong labor market in the US during the last few weeks. A better-than-expected figure will likely strengthen the USD.

The US will also release S&P Global Manufacturing PMI tomorrow; experts' consensus is at 51.3, a lower figure than the previous 52.2, but still within the expansion zone above 50.

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EURUSD - 0.28%

The EURUSD reached its lowest level in more than 20 years; the pair continues trading below parity. The EUR lost ground against the USD after the release of high-impact economic indicators earlier in the session.

The Euro Area released S&P Global Services PMI; experts anticipated a slight economic expansion in the Service sector with a 50.2; however, the result came out short at 49.8. The result indicates there is a contraction in the industry, weakening the EUR during the trading session.

The EU also released Retail Sales MoM; analysts expected 0.4%; however, the result came out at 0.3%, showing a slowdown in economic activity, which affected the EURUSD exchange rate.

The US will release S&P Services PMI during the next trading session. A significant contraction is expected; expert consensus is at 44.8; a higher figure will strengthen the USD against other currencies.

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EURUSD +0.17%

The Euro Area released the inflation rate earlier today, and the result came out as expected at 9.1%, which did not influence the EURUSD exchange rate much. However, the Consumer Price Index came out better than expected at 117.85, slightly strengthening the EUR during the trading session.

The US announced Michigan Consumer Sentiment for September, and the figure came out slightly lower than expected at 59.5; the consensus was at 60. The USD lost some ground and is currently trading very close to parity.

The Federal Reserve Interest rate hike consensus is starting to increase, as the US inflation data showed that the inflationary pressures have not decreased significantly; experts say that the hike could go up to 100 basis points in the next Fed's Interest Rate Decision.

FOMC Economic Projections will also be announced on Sept 21st; this will give market participants a good picture of where the US economy stands as the Fed is looking to slow down economic activity to control inflationary pressures.

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EURUSD -1.24%

The EURUSD pair reached its lowest level in 22 years after the US Fed hiked the interest rate to 3.25%, a 75 basis point hike that analysts anticipated. The Euro recovered some of the lost ground after Fed Chair Powell's Speech, where he talked about an economic slowdown in the US economy and a growth rate below trend.

We are seeing a resilient labor market where tighter monetary policy has not been taking much effect; however, Powell mentioned that labor markets have been very strong in a robust economy and that we are seeing the effects of rate hikes on sectors of the economy that are more rate sensitive like the Housing market. He also mentioned that the rate hikes are not seeing much effect in other sectors as people have money from when they were not spending during the pandemic.

We will start to see a slower level of growth which will give rise to an increase in unemployment; the projections increased by 1% from June figures, and the expected unemployment rate for this year is now at 4.4%.

The Fed's restrictive monetary policy continues; the message is that the FOMC is strongly committed to bringing inflation down to 2% and that the rate hikes will continue until there is clear evidence that inflation is moving down to 2%.

Powell said, "Americans need to be prepared for economic pain in the short term" and that "there is no painless way to get inflation down; the interest rates can be painful at the beginning, but they set the stage to achieve maximum employment and price stability, supply and demand need to align, and the way to do that is by slowing down the economy."


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EURUSD +1.70%

The euro is gaining ground against the USD, and it is up 3.95% in the last five trading sessions. The pair is getting close to reaching parity, currently at 0.99831. High-impact economic indicators suggest that the US economy is finally slowing down.

The US released ISM Manufacturing PMI in the previous session; the result came short of expectations, which hurt the USD. This morning the US also announced JOLT Job Openings for August, which came out at 10.053M. Experts anticipated a higher figure by 772K.

The labor market has been solid in the US in the last few months; however, there has been a notable economic deacceleration in the previous few days. This is an important week for the USD as they will announce S&P Global Services PMI and ISM Non-Manufacturing PMI tomorrow, Initial Jobless Claims on Thursday, and Non-Farm Payrolls on Friday. The last two indicators will gauge the strength of the US labor market in the previous month.

Tomorrow, the Euro Area will release S&P Global Services PMI; the previous figure was 49.8, and experts anticipate a drop for September; the analyst consensus is 48.9, which suggests industry contraction, which could benefit the USD.

Later this week, the Euro Area will also release other high-impact economic indicators. Retail Sales MoM are expected to fall from -0.3% to -0.4%, while the Retail Sales YoY are expected to have a steeper decline from -0.9% to -1.7%, likely affecting the EURUSD exchange rate.

The general trend is currently upwards as the price is now above the short and long-term moving averages; the uptrend is likely to continue if the fundamental news releases are unfavorable for the US labor market.


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And read more useful trading insights at https://news.baxiamarkets.com/

This publication does not provide financial advice for traders, and its only purpose is education. Use all the available information from different analysts and develop your own trading strategy. Trading forex and cryptocurrencies is not for everyone. You should only trade with money you can afford to lose. Past performance does not indicate future results.

EURUSD could resume downtrend
The EURUSD broke a four-day losing streak in the previous trading session; the pair recovered some of the ground it lost last week. The general trend continues to be downwards as the price is trading below the short and long-term moving averages.

The pair is finding resistance on our 50% Fibonacci retracement at $0.97678; this is an important level as a breakout confirmation will represent a potential trend reversal. However, there is another strong resistance on our 38.2% Retracement at $0.98225.

The relative strength index is at 44%, allowing the pair to move in either direction before entering an oversold or overbought status. Our parabolic SAR indicator suggests that the price will continue to move upwards in the short term.

Upcoming Events for Oct 12th, 2022

The United States will release the Producer Price Index for September, which measures price changes in consumer goods and services from a seller's perspective; this economic indicator is a great way to gauge inflation. Analysts expect PPI MoM to increase from a previous -.01% to 0.2% this month. A higher figure will benefit the USD as it shows solid economic activity.

The FOMC will release Minutes later in the day, which will likely significantly impact the USD exchange rate against other currencies, particularly other major forex pairs. The minutes provide a summary of the discussions during the FOMC Meetings. This announcement will give market participants a good gauge of the future Fed's plans regarding monetary policy.

Later in the day, the Euro Area will release Industrial Production MoM; the expert consensus suggests that the figure will improve from -2.3% to 0.6%; a higher-than-expected result will benefit the EURUSD.


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And read more useful trading insights at https://news.baxiamarkets.com/

This publication does not provide financial advice for traders, and its only purpose is education. Use all the available information from different analysts and develop your own trading strategy. Trading forex and cryptocurrencies is not for everyone. You should only trade with money you can afford to lose. Past performance does not indicate future results.