By ForexTime
The world’s most-traded currency pair could reach a fresh 9-month high in the upcoming week, as markets compare the latest policy clues between the US Federal Reserve and the European Central Bank.
To be clear, it’ll be a massive week that extends beyond major central bank decisions (the Bank of England is in action too).
We’ll also see the biggest tech earnings, and even an OPEC+ decision.
In other words, major asset classes are set to be rocked by these major economic data releases and events due in the week ahead:
Monday, January 30
Free Reports:
Tuesday, January 31
Wednesday, February 1
Thursday, February 2
Friday, February 3
In fewer words:
Fed = 50 bps hikes total remaining (including next week’s 25bps hike)
ECB = 125 bps hikes total remaining (including next week’s 50bps hike)
This idea that the ECB has more rate hikes in store relative to the Fed is what’s been propelling EURUSD to its highest levels since April 2022.
However, note that EURUSD’s surge is consolidating just below a key Fibonacci level – the 50% line from its January 2021 through September 2022 descent.
The price action suggests that the next move for EURUSD may well depend greatly on what either the ECB or Fed reveals next week.
(or a combo of the above factors)
… that may rapidly unwind some of EURUSD’s recent gains.
SUPPORT
RESISTANCE
At the time of writing, markets are forecasting a 70% chance that EURUSD will trade within the 1.07 – 1.105 range over the next one-week, while the implied-volatility is back to its year-to-date high which saw the latest leg up for EURUSD.
Ultimately, this next big move for the world’s most-traded currency is set to be dictated by what either the Fed or the ECB signals to the markets next week.
Make sure you also check back on Monday (January 30th) for our next Trade of the Week (published every Monday), as we then focus on GBPUSD and how it may react to the upcoming policy signals out of the Fed vs. the BOE.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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