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Investing.com – The week begins in negative territory for the pair, which opened lower last night, extending its decline to a low of 1.0340 amid widespread aversion to risk assets.
People in China have clashed with police in several cities, including Beijing and Shanghai, over the weekend, as general discontent with the Zero-Covid policy reached a fever pitch following a deadly fire in western China. In the past week. The clashes also take place in the aftermath of the Zhengzhou riots over the government’s reimposition of lockdown on the city.
The EUR/USD economic calendar is up this week
In the markets, this situation translates into a desire for caution on the part of investors, which favors assets considered a safe haven such as the dollar, hence the current weakness of the EUR/USD.
During the rest of the day, this topic will continue to be the center of attention at first, before the focus of attention shifts to the ECB, and to the appearance that Christine Lagarde will offer at 3:00 p.m. (CET) . Several members of the Fed will also speak, including Bullard, at 6:00 PM ET.
However, we will have to wait a few days for the major events of the week for the EUR/USD, especially the Eurozone November CPI flash reading to be released on Wednesday morning, the spending-linked PCE price index US household data (the Fed’s favorite inflation measure) on Thursday, and the US nonfarm payrolls report for November on Friday.
Check out the full list of statistics that could weigh on EUR/USD this week in our economic calendar.
Expectations ahead of the next Fed meeting remain key for EUR/USD
The week will be packed with key events, particularly in the US, which will allow the market to further refine its expectations for the next Fed meeting. At the time of writing, the Investing Fed Rate Barometer .com shows a 75.8% probability that the Fed will stop raising rates to 0.5% in its next decision, which will be announced on December 14.
However, stronger than expected US economic data could reduce this probability in favor of a further 0.75% rate hike, which would be dollar positive and therefore automatically negative for the EUR. /USD.
Conversely, a series of negative surprises in this week’s US economic statistics could further boost market certainty that the Fed’s rate hike will slow, with a bullish impact on EUR/USD.
EUR/USD technical profile deteriorates
Finally, from a charting point of view, it is worth noting that the EUR/USD correction since the forex market reopened last night has taken the pair below its 200-day moving average, which is a negative sign. .
Euro-Dollar Daily Chart (EUR/USD)
Now the next possible support level for EUR/USD is the psychological threshold of 1.03, ahead of last week’s lows around the 1.0225 level. To the upside, the 200-day MA now at 1.0380 is the next resistance level, before 1.04, then last week’s highs at 1.0450, 15th Nov high of 1.0480, and finally the psychological level of 1.05.
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