EUR/USD Outlook: Reversal of Bearish Trend with Potential for Upside to this Level
Market focus is on the European Central Bank (ECB) interest rate decision on Thursday, March 16, with an expectation for a 50 basis point increase. Additionally, Tuesday, March 14, will see the release of the US CPI for February, which will be closely watched. Technically, EUR/USD is inclined towards a bullish trend in the short term.
EUR/USD Fundamental Outlook: Focus on US CPI on Tuesday
Given the persistently high inflation in the Eurozone, which remains well above the ECB's 2% target level and the continued rise in core inflation, the market generally expects the ECB to raise interest rates by 50 basis points in March. ECB President Lagarde has previously stated that all recent data confirms that a 50 basis point rate hike is highly probable. The ECB has also emphasized that it will not make any pre-commitments regarding interest rates, and future rate hikes will depend on specific data.
Furthermore, it is worth noting that there is increasing disagreement within the ECB, with hawkish officials calling for four consecutive 50 basis point rate hikes, while other dovish officials suggest that the lag effect of interest rate increases should be considered and that action cannot be based solely on data. After the interest rate decision on Thursday, March 16, the ECB press conference will be the focus of market attention.
In addition to the ECB interest rate decision, the US CPI for February, which will be released on Tuesday, March 14, will be another key driver for EUR/USD. The market generally expects the US CPI to have an annual rate of 6.00% in February, lower than the previous value of 6.40%; the core inflation rate is also expected to continue to fall slightly to 5.50%, slightly lower than the previous value of 5.60%.
The latest US nonfarm payrolls report showed a significant increase in employment in February, exceeding expectations, but wage growth slowed, and the unemployment rate rose from 3.4% to 3.6%. The Federal Reserve is closely monitoring changes in economic data, and if inflation data continues to decline, it will further support the Fed's decision to raise interest rates by only 25 basis points in March.
EUR/USD Daily Trend Chart: Bullish
On the daily chart, as of now, EUR/USD has rebounded significantly, largely reversing the downward trend of the currency pair since early February and is inclined towards a bullish trend in the short term. The immediate resistance may be at the high point of February 14 (1.0804) and the low point of January 31 (1.0802). The market sentiment is currently heavily bullish, and there will be no significant correction for the time being. Last week's recommendation to buy on the rise resulted in a significant increase, and it is advisable to continue holding and looking for further upside potential.
Market changes are fast-paced, and it is essential to keep track of developments to avoid unnecessary losses.
Market focus is on the European Central Bank (ECB) interest rate decision on Thursday, March 16, with an expectation for a 50 basis point increase. Additionally, Tuesday, March 14, will see the release of the US CPI for February, which will be closely watched. Technically, EUR/USD is inclined towards a bullish trend in the short term.
EUR/USD Fundamental Outlook: Focus on US CPI on Tuesday
Given the persistently high inflation in the Eurozone, which remains well above the ECB's 2% target level and the continued rise in core inflation, the market generally expects the ECB to raise interest rates by 50 basis points in March. ECB President Lagarde has previously stated that all recent data confirms that a 50 basis point rate hike is highly probable. The ECB has also emphasized that it will not make any pre-commitments regarding interest rates, and future rate hikes will depend on specific data.
Furthermore, it is worth noting that there is increasing disagreement within the ECB, with hawkish officials calling for four consecutive 50 basis point rate hikes, while other dovish officials suggest that the lag effect of interest rate increases should be considered and that action cannot be based solely on data. After the interest rate decision on Thursday, March 16, the ECB press conference will be the focus of market attention.
In addition to the ECB interest rate decision, the US CPI for February, which will be released on Tuesday, March 14, will be another key driver for EUR/USD. The market generally expects the US CPI to have an annual rate of 6.00% in February, lower than the previous value of 6.40%; the core inflation rate is also expected to continue to fall slightly to 5.50%, slightly lower than the previous value of 5.60%.
The latest US nonfarm payrolls report showed a significant increase in employment in February, exceeding expectations, but wage growth slowed, and the unemployment rate rose from 3.4% to 3.6%. The Federal Reserve is closely monitoring changes in economic data, and if inflation data continues to decline, it will further support the Fed's decision to raise interest rates by only 25 basis points in March.
EUR/USD Daily Trend Chart: Bullish
On the daily chart, as of now, EUR/USD has rebounded significantly, largely reversing the downward trend of the currency pair since early February and is inclined towards a bullish trend in the short term. The immediate resistance may be at the high point of February 14 (1.0804) and the low point of January 31 (1.0802). The market sentiment is currently heavily bullish, and there will be no significant correction for the time being. Last week's recommendation to buy on the rise resulted in a significant increase, and it is advisable to continue holding and looking for further upside potential.
Market changes are fast-paced, and it is essential to keep track of developments to avoid unnecessary losses.
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