FOREX Fundamental analysis for EUR/USD on January 24, 2023
Apparently, market participants are once again trying to get ahead of the event, and in full confidence of a "dovish" reversal of the Fed, as well as a rapid recovery in China, are buying stocks and risky assets, which may eventually lead traders to losses.
Markets are once again overconfident. They are waiting for inflation to fall sharply, forgetting that it only happens when the economy is in recession, as it did, for example, in 2008. But there are hardly any signs of an economic slowdown in the United States today. And the Eurozone has managed to avoid a recession.
If inflation does not fall as fast as investors expect it to, EUR/US will slow the pace of recovery anyway. Moreover, the volume of net sales of the dollar reached a maximum of June 2021, and investors can start taking profits at any time, taking advantage of the release of even the most positive news from the Eurozone (buy on rumor, sell on fact). After all, when the crowd sells there is a good opportunity to buy on the downside.
So it is no coincidence that the increase of the index of consumer confidence in Eurozone to the February maximum was a signal for the decrease of the Euro, though with the release of the report there was an additional argument for the evasion of the recession.
Investors are getting greedy and the EUR/USD pullback can start at any moment. The Eurozone manufacturing and service sector business activity indexes will be released today. If forex trading on the news will allow the crowd to go long, then large investors can sell well. We will keep an eye on the level of 1.087. If the "bulls" will not be able to go higher, we will expect the decline to 1.085; 1.083 and lower.