Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
EUR/USD Latest: EURUSD Prints Largest Single Day Rise Since 2020

EUR/USD Latest: EURUSD Prints Largest Single Day Rise Since 2020

Richard Snow, Analyst

EUR/USD News and Analysis

  • EUR/USD prints largest one day rise since 2020 after large USD repositioning
  • EUR/USD shows little sign of fatigue after powering through crucial 1.0100
  • ECB members talk tough on rate hikes in contrast to the Fed
EUR Forecast
EUR Forecast
Recommended by Richard Snow
Get Your Free EUR Forecast
Get My Guide

EUR/USD Prints Largest One Day Rise Since 2020

Yesterday’s lower US CPI print filled the market with optimism as traders and investors alike now heavily anticipate a 50 basis point hike next month and a lower terminal rate for the Federal funds rate (around 4.9%). The shift in positioning has sent US yields and the dollar sharply lower, boosting equity markets in the process. The lower dollar, measured via the dollar index DXY, tends to have an inverse effect on EUR/USD which saw its largest single day rise since 2020.

US Treasury Yields Dropping Across the Board

image1.png

Source: TradingView, Prepared by Richard Snow

The rate of change indicator shows just how significant yesterday’s price action was but another interesting takeaway is how extreme recent positive and negative moves have become – underscoring just how volatile the forex pair is right now.

Rate of Change (RoC) Indicator (EUR/USD)

image2.png

Source: TradingView, prepared by Richard Snow

EUR/USD Price Action

The EUR/USD forex pair broke above the ascending channel and now contends with a prior level of resistance around the 1.0280 level. This is after soaring past the 1.0100 level of resistance that had proven too stern a challenge in recent weeks. Its not unusual to see a pullback after such an advance but price action shows a continuation in the bullish momentum which highlights 1.0340 as the next level of resistance.

In the event 1.0280 proves too much of a challenge, a pullback towards the upper side of the channel or even back to that crucial 1.01000 level remain a possibility.

EUR/USD Daily Chart

image3.png

Source: TradingView, prepared by Richard Snow

Building Confidence in Trading
Building Confidence in Trading
Recommended by Richard Snow
Building Confidence in Trading
Get My Guide

ECB Members Talk Tough on Rate Hikes in Contrast to the Fed

At a time when various Fed members are referring to the appropriateness of slowing the pace of future rate hikes, ECB members continue to talk tough on inflation and future rate hikes which may see the relative interest rate differential between the two, narrow. Schnabel mentioned the need to raise rates into restrictive territory while Vasle communicated that inflation is more and more broad based.

The ECB and the Fed now appear likely to hike by a slower 50 basis points in December. The US November CPI print is due hours before the December Fed meeting and so another potential drop in inflation could see further downward revisions in the dollar into year end.

Signs of Hope Emerging in Europe?

With natural gas storage well above target (95.3% as of 9 Nov) in Europe and no obvious signs of a colder than normal winter, European fundamentals appear a little more optimistic – although inflation is still terribly high.

The ECB has also raised its staff projections for GDP inline with the IMF’s figure for 2022 to 3.1%, up from 2.9% in its June projection. The balancing act of avoiding a recession while tightening financial conditions remains a major challenge – shown by the massive drop off in GDP for 2023. Disappointing PMI data confirmed a contraction in services as well as the manufacturing sectors and consumer sentiment remains extremely low. Positive signs for the region appear few and far between.

image4.png

Source, ECB

Major Risk Events Ahead

image5.png

Customize and filter live economic data via our DaliyFX economic calendar

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES