Exchange Rates Consolidate at the Beginning of the Week

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Trading participants continue to evaluate the prospects for a change in the US Federal Reserve’s monetary course against the backdrop of the publication of the minutes of the January meeting. Officials reiterated their cautious stance on lowering borrowing costs and, moreover, expressed concern about the possibility of shifting too early to dovish rhetoric. The document strengthened investor confidence that the adjustment of parameters could be postponed until the second half of the year, which strengthens the US dollar’s position against its main competitors: at the moment, more and more investors are counting on the first adjustment to borrowing costs in June, but these expectations are also regularly revised. In the US, the publication of January statistics on the dynamics of sales of new homes is expected during the day: in the previous period, the figure increased by 8.0% month-on-month to 0.644 million units. On Tuesday, February 27, the US will release February statistics on durable goods orders and consumer confidence. Forecasts suggest a slowdown in the dynamics of orders for durable goods excluding transport from 0.5% to 0.2%.

EUR/USD

The EUR/USD pair shows a slight decline, holding at 1.0820. Immediate resistance can be seen at 1.0888, a break higher could trigger a rise towards 1.0960. On the downside, immediate support is seen at 1.0812, a break below could take the pair towards 1.0760.
Today investors will pay attention to the speech of ECB head Christine Lagarde. In the EU, February data on inflation dynamics will be presented at the end of the week: the consumer price index is expected to slow down from 2.8% to 2.5% in annual terms, and the core indicator – from 3.3% to 2.9%. Traders continue to evaluate German data on GDP and business optimism released on Friday. Thus, the German economy in the fourth quarter of 2023 lost another 0.3% on a quarterly basis and 0.4% on an annual basis. The IFO business optimism index in February adjusted from 85.2 points to 85.5 points, which coincided with analysts’ forecasts, the indicator for assessing the current situation remained at 86.9 points with expectations at 86.7 points, and the economic expectations index increased from 83.5 points to 84.1 points, while experts expected 84.0 points.

Technical analysis of EUR/USD shows that a new upward channel has formed based on last week’s highs. Now the price is near the lower border and may continue to rise.

GBP/USD

The GBP/USD pair is consolidating around 1.2660 after last week’s moderate upward dynamics. Immediate resistance can be seen at 1.2709, a break higher could trigger a rise towards 1.2772. On the downside, immediate support on the GBP/USD chart is seen at 1.2648, a break below could take the pair towards 1.2560.

Macroeconomic statistics from the UK published on Friday put slight pressure on the pound. Thus, the consumer confidence index from the analytical portal Gfk Group in February dropped from -19.0 points to -21.0 points, demonstrating negative dynamics for the first time in four months, while analysts expected -18.0 points. National households are concerned about their personal finances and economic prospects due to continued high inflation. In addition, private consumption in the country has still not returned to the level it was at before the COVID-19 epidemic. At the beginning of the week there will be speeches from representatives of the Bank of England, including Huw Pill and David Ramsden.

Based on the highs of last week, a new ascending channel has formed. Now the price is near the lower limit and may continue to rise.

USD/JPY

The USD/JPY pair is consolidating near the 150.50 mark. Trading participants are in no hurry to open new positions at the beginning of the week, while the news background is likely not to lead to increased volatility in the market. Strong resistance on the USD/JPY chart can be seen at 151.00, a break upward could trigger a rise to 150.76. On the downside, immediate support is seen at 150.29, a break below could take the pair towards 149.67.

Data presented in Japan did not support the yen’s position, as it again reflected the risks of a further slowdown in inflationary pressures in the country. Thus, the January dynamics of prices for corporate services slowed from 2.4% to 2.1%. Tomorrow, the focus of investors’ attention will be on the national consumer price index in Japan. Forecasts suggest a noticeable reduction in the indicator excluding fresh food prices in January from 2.3% to 1.8%.

Based on the highs of last week, a new ascending channel has formed. Now the price has moved away from the upper limit and may continue to decline.

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