Still very uncertain situation on the euro-dollar exchange – depositidiborsa.it
It was since September 2022 that the euro hadn’t lost so much against the dollar in just one week. After the worst week in 5 months, what could happen to the change? The situation is not very clear and all scenarios are still possible. As we will see, next week could be decisive for understanding the future of the single European currency against the greenback.
Why the euro has given way against the dollar
The euro experienced a tumultuous 2022when the war in Ukraine and Western sanctions against Russia have pushed Europe into one energy crisis Without precedents. The worsening economic prospectsincluding thesoaring inflation and theincrease in financing costs, prompted economists to predict a deep recession in the eurozone, dragging the euro lower. This prompted investors to take refuge in the dollar, considering it a safe haven. The dollar rose further against the euro.
The euro also suffered from the initial reluctance of the ECB to raise interest rates. This has meant that key rates in the eurozone have fallen well below those in the United States, where the Fed started with aggressive hikes earlier. Higher yields in the US have attracted foreign investors, favoring the dollar.
What could be the causes for a resumption of the rise
The rise of the euro in the last months it has a lot to do with a warmer winter in Europe. Warmer-than-normal weather, aided by an impressive effort by rreduction of gas consumptionhas not only eased concerns about blackouts and energy rationing, it has also reduced natural gas prices.
What could happen to the euro dollar exchange rate?
The outlook for the euro remains uncertaingiven that the European economy is not out of the woods yet. The threat of rising energy prices still persists, the war in Ukraine is still ongoing and a recession has not yet been completely ruled out.
After the worst week in 5 months, what could happen to the euro dollar exchange rate? The indications of the graphic analysis
On February 3 the closing of the exchange euro Dollar (FXEURUSD) was at 1.0795, down 1% from the previous session. The week ended down 0.68%.
Daily time frame
The averages have crossed downwards, but after 3 consecutive downward sessions the exchange rate seems to have stabilized
The short picture is not particularly exciting for the euro-dollar exchange rate which reversed downwards. At this point, a return to the recent low in the 1.05 area could be very likely. On this level, then, the fate of the exchange rate should be decided, which could rebound back to the 1.1 area.
After the worst week after 5 months, the most probable scenario could therefore be the one that sees the prices fluctuate within the trading range of 1.05 -1.10. Only the break of one of these levels could give directionality to the quotations.
Weekly time frame
Averages still crossed upwards on the weekly time frame, but we must be careful – projectionsdiborsa.it
For the second consecutive week quotes close downwards. Such an event not seen since September 2022. The knots, however, are about to come home to roost. Indeed, as can be seen from the graph, quotations rested on the long-term average (red line) the break of which could open to a strong downward acceleration.
Also in this case, the bulls could gain the upper hand on a weekly close above 1.1.
Articles that may interest you
Stock markets break support and are now pointing to the downside: where will time square with price?
Set aside 1 euro a day and the result will be extraordinary! Beyond belief!
