The exchange rate between the euro and the dollar remained stable within a tight range on Monday morning as market participants reacted to the latest macroeconomic data from the United States and its possible effects on the Federal Reserve. The current trading value is 1.1867, a bit below this month’s high of 1.1935. The EUR/USD pair saw a minor pullback as traders reacted to significant macroeconomic data coming out of the United States. A report indicated that the economy added 130,000 jobs in January, with the unemployment rate improving to 4.3 percent.
Another report indicated that the nation’s inflation continues to decline in January. The headline Consumer Price Index fell to 2.4% from 2.6% in the previous month. Core inflation, without the variable food and energy prices, remained stable at 2.5%. If this trend continues, it is likely that the Federal Reserve will make more cuts to interest rates than expected later this year. While the Fed has indicated that it may implement one reduction this year, market participants expect that the bank will carry out two or three more reductions. The EUR/USD pair is anticipated to hold its ground this week, especially with the US markets closed on Monday for President’s Day. The effect is expected to be muted since both the Fed and the European Central Bank have already issued their interest rate announcements this month.
Furthermore, there are no major economic indicators scheduled for release from the US or the European Union this week. This week, the main indicators to keep an eye on are US housing starts, building permits, and pending home sales data. The main attention will be on the upcoming Federal Reserve minutes, set to be released on Wednesday. The exchange rate between the euro and the dollar has seen a drop lately, falling from a high of 1.2095 in January to its present value of 1.1867.
On the positive side, the pair continues to remain above the 50-day and 100-day Exponential Moving Averages. At the same time, the Relative Strength Index and the Percentage Price Oscillator have pulled back. It remains within the upward channel. As a result, the pair is anticipated to undergo a bullish breakout, potentially hitting the important resistance level at 1.2000. A drop below the crucial support level of 1.1765 will invalidate the positive outlook.