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EUR/USD: Fed Minutes and German PMI in Focus

EUR/USD Fed minutes German PMI

Stay updated on EUR/USD as the market awaits insights from the Fed meeting minutes and German PMI data for potential direction amidst the holiday pause.

The Euro weakened marginally against the US Dollar in the European trading session, extending its prevailing downtrend observed throughout the year. However, with the US market predominantly inactive due to the Presidents’ Day holiday, significant market movements are anticipated later in the week, coinciding with the release of critical economic data.

Investors eagerly await the release of the Federal Reserve’s monetary policy meeting minutes on Wednesday, expecting insights into the central bank’s stance amidst recent solid economic indicators. Despite indications pushing back rate-cut expectations to June, market sentiment remains sensitive to the nuanced discussions within the Fed.

Market participants eagerly anticipate the release of Germany’s Purchasing Managers Index (PMI) data for February on Thursday. Forecasts anticipate a continuation of the manufacturing sector’s contraction, albeit slower than the previous month. The expected reading of 46.1, following January’s 45.5, emphasizes persistent challenges within the sector.

EUR/USD: Fed Minutes and German PMI in Focus

While in-line figures may not prompt immediate adjustments to Germany’s record-high interest rates, the European Central Bank remains cautious regarding inflationary pressures. Some economists project a return to the 2% inflation target, with no rate cuts expected in the near term.

The Euro’s downward trajectory against the Dollar persists, with limited events on this week’s agenda offering potential reversals.

Technical analysis indicates the Euro’s adherence to a downtrend channel since December 28, with resistance expected around the 1.07853 level. Recent movements have brought the market back within a broad trading range observed in early December, signaling support from Euro bulls despite brief dips below the lower bound.

The breach of the 200-day moving average on February 2 underscores the Euro’s ongoing struggle, with the average now positioned above the market at 1.08625.

IG’s data reflects that market sentiment suggests a balanced sentiment between bullish and bearish positions on EUR/USD, hinting at a market awaiting a catalyst for direction.

In summary, while the Euro contends downward pressure against the Dollar, investors eagerly await key economic releases, particularly Germany’s PMI data, for potential insights shaping market sentiment and direction.

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