FOREX Fundamental Analysis for December 29
Forex currency trading consists of ups and downs. And even though the S&P 500 is still trying to continue growing, EUR/USD failed to stay above 1.10, provoking sell-offs of risky assets. There are a lot of contradictions in the market, so the continuous rise of the pair does not look very logical. Yes, the Fed is planning to cut the rate. But not from the beginning of the year and not by 150 basis points, as the markets expect. The United States economy is strong, while the Eurozone economy is breathing down the drain. Why is the euro, and not the dollar, rising in this environment?
Of course, the greenback is a defensive asset or the currency of pessimists. And now the market is ruled by optimism, often turning into greed. This led to the fact that the dollar lost 4.6% during the fourth quarter.
The best results among the G10 currencies were demonstrated by British sterling and Swiss franc. The worst performance was demonstrated by the Japanese yen. It is noteworthy that in the coming year the Swiss National Bank plans to move to easing financial conditions, while the Bank of Japan has not decided to change the course of monetary policy, the only one of the central banks of developed countries keeps the rate in the negative zone.
What awaits traders and investors in 2024? The falling dollar is a positive factor for most of the world economy, as it reduces the cost of servicing dollar liabilities, lowers energy prices and generally promotes international trade. In addition, the profits of US companies are rising, as are the quotations of risk assets. This is good for EUR/USD. If the pair rose in December without paying attention to the Eurozone economy, next year it is even hard to imagine what heights the major currency risk could reach.
The medium-term and long-term prospects of EUR/USD are certainly bullish, but no one canceled the corrective pullbacks. Especially now, when the market was clearly ahead of the curve. The S&P 500 showed a 9-week gain, the best since 2004.
The EUR/USD correction will not break the uptrend, but it will give the buyers a breather. We will use the pair's decline below 1.055 to build up longs