FOREX Fundamental Analysis for EUR/USD on March 1, 2023
The big players tend to have their own forex trading techniques and start selling when everyone else is buying and vice versa. Eurozone inflation reports allowed the futures market to raise the ECB's potential rate ceiling to 4%. This sent the pair quotes to 1.064, from which there is a great opportunity to sell, as investors are unlikely to abandon the dollar in the environment of the Fed dominance.
In February the situation in the market has noticeably changed. If in January the S&P 500 rose by 8%, which was a good support for risky assets due to currency correlation, then during the last winter month the index lost 2.6%, but the yield of 10-year treasuries came close to 4% and the dollar index added 2.7%. And all this because investors have finally put aside the idea of a "dovish" reversal by the Fed, helped in no small measure by the statistics of the United States.
The streak of positive reports was interrupted by the weak consumer confidence index and decline in business activity from the Chicago Federal Reserve Bank. However the US dollar didn't get upset, because much more important news are to come - the labor market report in the US (March 10) and inflation data. (March 14). In this backdrop EUR/USD has entered the 1.048-1.068 range and is unlikely to leave it before the first important release.
Growing inflationary pressures in France and Spain increase the likelihood of a weaker consumer price dip in February. Bloomberg expects CPI to slow from 8.6% to 8.1%, while core Eurozone inflation will remain at a peak of 5.3%. This could force the ECB to raise rates decisively, which would support the European currency.
In addition, the euro will support a global economic recovery led by China, especially if U.S. reports disappoint investors.
We can say that a revolutionary situation is forming for EUR/USD - there is no reason to go up, and nobody is waiting below. We believe that the consolidation in the range of 1.048-1.068 will continue. Let's stick to the forex trading strategy in the channel. Sell from the upper border and buy from the lower one.