Trusted by over 15 Million Traders
The Most Awarded Broker
for a Reason
CATEGORIES
News
- The "shutdown" continues, the U.S. Senate rejects the temporary appropriation bi
- Expectations of interest rate cuts push the sun, and gold and silver bulls hit t
- The Fed & ECB interest rate decisions are coming!
- The U.S. government shutdown is turning around, but there are still "hawks and d
- A collection of good and bad news affecting the foreign exchange market
market news
The euro collapsed to a two-week low, and 1.18 became a "life and death line"?
Wonderful introduction:
Spring flowers will bloom! If you've ever experienced winter, you've experienced spring! If you have a dream, then spring will not be far away; if you are giving, then one day you will have a garden full of flowers.
Hello everyone, today XM Forex will bring you "[XM Forex]: The euro collapsed to a two-week low, 1.18 became a "life and death line"?". Hope this helps you! The original content is as follows:
On Friday, February 6, the EURUSD rebounded slightly after hitting a two-week low of 1.1765, trading around 1.18 during the European session. On the surface, the exchange rate seems to have stabilized, but analysts believe that this is more like a technical correction after a decline, rather than a signal of trend reversal. The entire market is still suppressed in a weak pattern, and the 1.1800 mark has become an important resistance level. If it cannot effectively break through and stand firm, the rebound is likely to be short-lived.
The global financial market has been turbulent recently, especially the sharp correction in the technology sector, which has triggered market concerns about the slowdown in corporate investment in the field of artificial intelligence. This risk aversion spread quickly, and investors turned to assets with more safe-haven properties. As a result, the dollar gained support and strengthened, which in turn further suppressed the performance of the euro.
U.S. employment has cooled significantly, and expectations for interest rate cuts have quietly increased.
The latest economic data in the United States has released an obvious signal of weakness. The number of people filing for unemployment benefits jumped from 209,000 to 231,000 last week, much higher than market expectations, indicating that the labor market is beginning to loosen at the margin. At the same time, the number of job vacancies fell to its lowest level in five years - only 6.542 million in December, down from 6.928 million in November. The previously released ADP private sector employment report was also weak, further confirming the cooling trend of the job market.
Normally, weaker employment data will enhance market expectations for the Federal Reserve to ease monetary policy ahead of schedule. Current federal funds rate futures show that the market has begun to seriously bet on the possibility of a rate cut within the year: the probability of a rate cut in March has soared to 22% from 9% a week ago, and the probability of a rate cut in April has risen from 24% to 40%. This change reflects that traders arein repricing future interest rate paths.
However, an interesting phenomenon is that even if expectations of interest rate cuts have increased, the US dollar has not fallen back sharply as usual. The reason is that, in the context of heightened global economic uncertainty, the dollar's safe-haven function has outweighed the downward pressure on its interest rates. Especially when some U.S. government agencies are facing a shutdown and the non-farm payrolls report is forced to be postponed until next week, the market lacks clear guidance and can only rely on fragmented data and sentiment to play games, causing volatility to quietly increase.
The European Central Bank is waiting to see what happens, as hidden concerns about euro zone growth emerge
The European Central Bank kept interest rates unchanged as scheduled on Thursday, and the deposit mechanism interest rate continued to remain at 2%. The policy statement emphasized that inflation is gradually moving closer to the 2% target, and believed that the current monetary policy stance was "appropriate". At the same time, it did not express concerns about the excessive strength of the euro exchange rate. Although such a statement is in line with expectations, it also means that the European Central Bank has no intention to take any action in the short term and will neither raise nor cut interest rates.
Although this "wait-and-see mode" has brought policy stability, it has not provided additional upward momentum for the euro. The real challenge www.xmtraders.comes from fundamentals - German industrial output released on Friday shrank sharply by 1.9% month-on-month, far worse than the expected decline of 0.3%; to make matters worse, the November data was also revised down from the original estimate of 0.8% growth to only 0.2% growth. As the largest economy in the euro zone, the weak performance of German industry has directly affected the market's confidence in a soft landing of the economy.
Industrial activity is a "barometer" of the economy, and its continued downturn may drag down corporate investment willingness and future inflation prospects, thereby affecting the space for the European Central Bank's subsequent decision-making. If growth momentum weakens further, markets will have to reassess the ECB's interest rate path. At present, the fundamental support of the euro is being eroded, and it is difficult to reverse the decline with policy determination alone.
As the key event approaches, the foreign exchange market may make a direction decision
The market will next usher in two important events worthy of attention. The first is whether ECB officials will speak publicly. Any subtle words about the path of inflation or the outlook for interest rates may trigger short-term violent fluctuations. Although the overall policy tone is relatively stable, if individual officials release dovish signals, it may still suppress the euro; conversely, if they emphasize their determination to fight inflation, it may bring a short respite for the euro.
The second is the initial value of the Michigan consumer confidence index in February in the United States. The market expected it to be 55.0, lower than the previous value of 56.4. If the actual data continues to weaken, it will further strengthen the narrative of consumer weakness and push the market to increase bets on the Federal Reserve to cut interest rates as soon as possible; however, if the data shows resilience, even if it is only slightly higher than expected, it may be interpreted as that the economy still has support, thus boosting the dollar again and limiting the euro's rebound space.
From a technical point of view, 1.1765 has initially formed a support band, showing a certain degree of buying capacity, but there is obvious resistance in the 1.1880 area above. If risk sentiment fails to improve in the future and safe-haven buying of the US dollar continues, the exchange rate may still test the previous low again.point; on the contrary, if US data continues to be weak and market risk appetite picks up, the euro is expected to try to challenge higher resistance.
The above content is all about "[XM Foreign Exchange]: The euro collapsed to a two-week low, and 1.18 became the "life and death line"?" It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some contents in the article still need to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
Disclaimers: XM Group only provides execution services and access permissions for online trading platforms, and allows individuals to view and/or use the website or the content provided on the website, but has no intention of making any changes or extensions, nor will it change or extend its services and access permissions. All access and usage permissions will be subject to the following terms and conditions: (i) Terms and conditions; (ii) Risk warning; And (iii) a complete disclaimer. Please note that all information provided on the website is for general informational purposes only. In addition, the content of all XM online trading platforms does not constitute, and cannot be used for any unauthorized financial market trading invitations and/or invitations. Financial market transactions pose significant risks to your investment capital.
All materials published on online trading platforms are only intended for educational/informational purposes and do not include or should be considered for financial, investment tax, or trading related consulting and advice, or transaction price records, or any financial product or non invitation related trading offers or invitations.
All content provided by XM and third-party suppliers on this website, including opinions, news, research, analysis, prices, other information, and third-party website links, remains unchanged and is provided as general market commentary rather than investment advice. All materials published on online trading platforms are only for educational/informational purposes and do not include or should be considered as applicable to financial, investment tax, or trading related advice and recommendations, or transaction price records, or any financial product or non invitation related financial offers or invitations. Please ensure that you have read and fully understood the information on XM's non independent investment research tips and risk warnings. For more details, please click here