FOREX Fundamental analysis for EURUSD on April 14, 2023
Who will remember that a few months ago the European currency fell below parity level against the US dollar, and most analysts predicted a further decline, up to 0.8?
In 2023 the hard times for the euro are behind us. The energy crisis is over, the Chinese economy is recovering successfully, the ECB starts to tighten its monetary policy.
While last year the regulator was wary of raising rates because of the negative impact on the economy, these risks are now a thing of the past. Moreover, the yield gap between German bonds and bonds of other countries has narrowed considerably, which strengthens investors' confidence in the strength of the European currency.
The tailwinds carried EUR/USD to the annual maximum. Nice support to the single currency is provided by the macroeconomic statistics of the Eurozone.
European Central Bank does not prevent to continue the cycle of monetary restriction. The futures market predicts a rate hike of 75 basis points to 5.25% in 2023. The divergence of the ECB and Fed monetary policy rates allows EUR/USD to continue to strengthen.
The Fed, in turn, is ending its rate hike cycle, especially against the backdrop of an ongoing banking crisis and worrisome signals from economic indicators.
US inflation dynamics
The EUR/USD is confidently climbing up to the designated targets at 1.12 and 1.14. Our forex trading strategy implies buying on pullbacks and corrections. With a short-term decline in the pair to the area of 1.1010-1.1015 we will build lots.