The price of the EUR/USD currency pair may continue to move in tight ranges until the US Federal Reserve announces its monetary policy decision update. Today is the most important date for global markets in general and the forex market. Markets are on a date to raise US interest rates for the first time since 2018. 1020, and it is stabilizing around the 1.0945 level at the time of writing the analysis.
Along with expectations of higher U.S. interest rates, renewed fears of the coronavirus top a long list of concerns for markets, which have caused extreme hour-to-hour volatility in recent times. weeks. The war in Ukraine has driven up the prices of oil, wheat and other goods produced in the region. This increases the threat that already high inflation will persist and combine with a potentially stagnant economy.
Meanwhile, global central banks are preparing to withdraw the support they provided to the global economy after the pandemic hit. The Federal Reserve begins its two-day meeting on interest rates, and is widely expected to announce a 0.25 percentage point increase to the short-term policy rate today. This would be the first increase since 2018, taking it above a record low of near zero, and likely the first in a series of price increases. The Fed is trying to slow the economy enough to stem the high inflation that is sweeping the country, but not enough to cause a recession.
Inflation is already at its highest level in generations, and the latest figures do not include the spike in oil prices that occurred after Russia invaded Ukraine.
Recent data showed that inflation was still very high at the wholesale level last month, but at least it was not accelerating. Producer prices rose 10% in February from a year earlier, at the same pace as in January. On a monthly basis, inflation rose 0.8% in February from January, against expectations of 0.9%. This represents a slowdown from January’s inflation rate of 1.2% m/m.
So economists said the numbers are still too high and will keep the Fed on track to raise rates today, but at least they weren’t worse than expected. A separate Federal Reserve Bank of New York survey showed manufacturing in the state fell for the first time since the pandemic began. A weak economy could make the Fed less aggressive in raising interest rates.
According to the technical analysis of the pair: There is no change in my technical view as the price of the EUR/USD currency pair will remain stable in tight ranges until the US Federal Reserve announces its monetary policy decisions today today. The general Euro-Dollar trend is still bearish, and the move back towards the psychological support at 1.0800 is possible if the Russian-Ukrainian war continues. Investors care little about the arrival of technical indicators towards oversold levels as much as they follow the effects of the war on the future economic recovery of the euro zone.
On the upside, and depending on the performance on the daily chart, the breakout of the 1.1125 and 1.1260 resistance levels will be important to start breaking the pronounced downtrend channel in the currency pair. The currency pair will be affected today by a set of US economic data, led by US central bank announcements and US retail sales figures.