empty
 
 
ar
الدعم
فتح الحساب الفوري
منصة التداول
إيداع/ سحب

28.12.202109:20 Forex Analysis & Reviews: EUR/USD: US dollar lacks acceleration, while the euro is on the defensive

Exchange Rates 28.12.2021 analysis

The balance of power in the financial market this year is disappointing, but still far from pessimistic. The US currency is growing with different levels of success, while the European one is doing its best to maintain its gained positions. This allows the EUR/USD pair to maintain a relative equilibrium.

At the beginning of this week, the demand for the US dollar increased again amid investors' withdrawal from risk. Market participants are set for calmness and stability before the holidays, so they invest in safe-haven assets. As a result, the price of the US dollar has noticeably risen, surpassing the euro again. However, the American currency lacks acceleration for a further breakthrough, and it remained in the same position. On Tuesday morning, the EUR/USD pair was trading in the range of 1.1326-1.1327, in which experts believe that it will remain until the end of the year.

Exchange Rates 28.12.2021 analysis

Despite the current stabilization of the classic pair, most market participants believe that the EUR/USD pair will continue to decline in 2022. The reasons for this are in the existing monetary policy, which is supported by the Fed and the ECB, as well as the long-term weakening of the European economy compared to the American one. It can be recalled that the United States economy recovered much faster than the Eurozone by the end of 2021.

The current situation depends on the bears on the EUR/USD pair. According to analysts, the downward trend will continue next year. On the other hand, the bulls will face difficulties. In this case, experts recommend selling the euro and buying the US dollar, focusing on the growth of bullish mood in the US currency. It should be noted that last week, large funds increased their US dollar purchases by 9%. The continuation of the current trend contributes to the further increase of this currency.

Experts said that the divergence in the monetary policy of the FRS and the ECB, difficulties in the process of growth of the American and European economies, and the weakening of the demand for risk, support the downward trend of the EUR/USD pair. It is possible that the pair will test the level of 1.1000 next year. Credit Suisse currency strategists expect the EUR/USD pair to make a pullback to 1.1019 (Fibo level is 78.6%, correction of the bullish trend of 2020-2021). The bank adheres to the "bearish" forecast for the classic pair.

"If the dollar continues to strengthen, this will lead to the EUR/USD pair falling below the 1.1000 mark after a period of consolidation," Credit Suisse notes.

Currently, the ratio in this pair is relatively stable. During the New Year holidays, investors do not make sudden movements and prefer to take profits. The last event this year that can influence the actions of traders will be macro data on the US labor market. It is forecasted that the number of applications for unemployment benefits in America will be 205 thousand.

On January 5, the Fed will publish its minutes of the December meeting, following which the markets expect more clarity about the further actions of the regulator. It can be recalled that the Fed kept the interest rate at the same level. At the same time, the rate of reduction in asset repurchases will be doubled from January 2022. The Fed's decision to significantly curtail the QE program will support the US dollar, as it indicates an early rate increase. However, experts fear changes in the decision of the regulator, who can revise its plans to tighten monetary policy.

Larisa Kolesnikova,
Analytical expert of InstaSpot
© 2007-2024
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account

InstaSpot analytical reviews will make you fully aware of market trends! Being an InstaSpot client, you are provided with a large number of free services for efficient trading.

لا تستطيع التحدث الآن؟
اطرح سؤالك في الدردشة.