EUR/USD price, analysis and charts
- The US dollar is on the back foot after Tuesday’s weaker-than-expected inflation rate.
- Comments from Fed Chair Powell and ECB President Lagarde will be key.
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The latest U.S. inflation report showed inflation easing in November; Falling oil prices will help reduce the cost of living. Annual inflation in the US is now at 7.1%, down from a 40-year high of 9.1% in June this year.
Tuesday’s better-than-expected inflation slowdown added to recent optimism in the market that the Federal Reserve may soon take its foot off the accelerator and start tapering off the pace of future interest rate hikes. The US dollar fell sharply yesterday and is currently biding its time today ahead of the FOMC rate decision, an updated dot plot and economic forecast and press conference.
For all market-moving economic releases and events, see DailyFX Calendar
In Europe, the ECB will announce its final monetary policy decision tomorrow (Thursday 15 December) at 13:15 GMT, 30 minutes after the all-important press conference. Both the Fed and the ECB are expected to raise their lending rates by 50 basis points, making the difference between the two the same, but the central banks may differ in their outlook for the coming months. While the Fed may be looking to reduce interest rate hikes in the coming months, the ECB needs more positive economic data before starting to slow down. The divergence of the two central bank forecasts in the coming months will determine where EUR/USD trades in the short to medium term.
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The euro hit a six-month high against the US dollar on Tuesday, before easing slightly. The 1.0674 high print may be retested in the near term with the late May high at the 1.0790 level as the next target. On the overall EUR/USD chart, the pair remains comfortably above all three moving averages, while the pair continues to make new highs, lows, and highs. The pair looks set to make new multi-month highs, the question is will the Fed and/or the ECB move?
EUR/USD Daily Price Chart December 14, 2022
Chart via TradingView
They are customers. Net long.
They are customers. Net short.
According to the data of retail traders, 38.73% of traders are net-long, while the ratio of short and long traders is 1.58 to 1. The number of traders is 9.64% lower than yesterday and 22.44% lower than last week, and net-short of traders is 2.00% lower than yesterday and 2.00% lower than last week. 7.94% is higher.
We usually take a contrarian view on public sentiment, and the fact that traders are net-short suggests that the EUR/USD price may continue to rise. Traders are shorter than yesterday and last week, and it gives us a combination of current sentiment and recent changes Strong EUR/USD-bullish trade bias.
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