EUR/USD Remains Vulnerable Ahead of Key Data Releases
EUR/USD Remains Vulnerable Ahead of Key Data Releases
The most influential institutions that impact the price of a currency are the Central Banks. The two largest and most powerful in the world are the US Federal Reserve and the European Central Bank (ECB).
Interest rates influence the price of EUR/USD because they determine the direction of monetary policy. The Fed releases the Federal Funds rate eight times a year, while the ECB does so monthly. It’s also important to monitor other economic announcements that can affect prices.
Among the many events that can be important for the EUR/USD, some are particularly significant: Non-Farm Payrolls in the United States and European Union; the ECB Interest Rate Statement; and a variety of Eurozone economic data releases such as inflation figures, unemployment rates and industrial and durable goods orders.
The first thing to consider when analyzing an economic announcement is the impact it will have on prices. You can find out the significance of certain news releases by tracking them in our Forex Calendar, which will indicate whether the announcement is expected to have an important (red), medium (yellow) or lower (green) impact.
Another important consideration is the timing of the news release. You’ll want to be sure to watch the news as soon as it is released, because it may have an immediate effect on EUR/USD prices.
For instance, the US Non-Farm Payrolls report is usually released on Friday, which can have a huge effect on the market as it reflects the strength or weakness of the economy. The ECB Interest Rate Statement is generally released on the third Thursday of each month, and is also a major event for EUR/USD traders.
There are also other factors that can affect the prices of the EUR/USD, including the state of economic and political sentiment in both countries. For example, the recent events in Ukraine may be making investors nervous and could cause EUR/USD to dip.
In the short term, EUR/USD is likely to test key support levels around 1.0655 and possibly even a weekly low at 1.0645. Should the pair breach these levels, the next target will be a strong Fibonacci retracement of 2022 decline at 1.0785.
The EUR/USD has been a popular pair to trade and the market has shown some growth recently, but it is still vulnerable ahead of key data releases. The next few weeks will be crucial for the pair, with traders focusing on economic and political events in both Europe and the U.S.
Looking at the chart above, you can see that EUR/USD has been moving up and down over the past few months, reaching a high of 1.6038 before slipping to $1.0490 in June. However, the pair has been able to recover and is now trading around $1.0100.
As a result, you should take advantage of these gains to enter a buy position in the pair before it starts to decline again. In addition, if the price breaks below the key level of 1.0600, you should look to lower your risk by entering a shorter trade.
