EUR/USD Analysis: A Cautious Wait-and-See Approach – 27 January 2025

-- As a new, significant trading week begins for the EUR/USD pair, the currency pair is consolidating around its recent gains, having surpassed the 1.0521 resistance level, its highest point in over a month, before settling around 1.0490.
-- Investors are awaiting crucial events that will be shaped by announcements from the US Federal Reserve and the European Central Bank, as well as a host of important economic releases.
-- The recent gains in the Euro-Dollar were primarily driven by a decline in the US Dollar against other major currencies, amid recent indications from Trump that he favours lowering US interest rates.

Euro-Dollar Awaits Central Bank Announcements

This week, the price of the Euro against the US Dollar will be particularly influenced by announcements from global central banks. In the United States, the Federal Reserve is expected to keep the federal funds rate unchanged at the 4.25%-4.5% range, pausing after three consecutive interest rate cuts in 2024. Traders will closely monitor the Fed's statement for insights into its plans for 2025, especially after the US central bank indicated in its last meeting that US interest rates are likely to be cut only twice in 2025.

Key economic data will also be in focus, including the advance estimate of US GDP growth in the fourth quarter, which is expected to be 3% annually, slightly lower than the 3.1% in the third quarter. Additionally, the Personal Consumption Expenditures report, which includes the Fed's preferred inflation measure, will provide important updates on inflationary pressures.

Other economic releases include US new and pending home sales, durable goods orders, and fourth-quarter employment cost index data.

On the earnings front, this week will be eventful. Tech giants Microsoft, Meta, Tesla and Apple are set to report their quarterly results, along with other major companies such as AT&T, Boeing, Lockheed Martin, Starbucks, T-Mobile, Chubb, ServiceNow, IBM, Danaher, Visa, Mastercard, Blackstone, Caterpillar, Comcast, UPS, Exxon Mobil, AbbVie and Chevron.

In Europe, the European Central Bank is expected to continue its interest rate cut cycle in 2025, with a 25-basis point cut widely expected. ECB President Christine Lagarde has stated that inflation is expected to reach the 2% target this year, providing room for easing monetary policy and supporting struggling economies. On the economic side, key GDP data for the fourth quarter will be released for the Eurozone, Germany, Italy, France, and Spain, with the region likely to grow by 0.1%, driven by Spain's 0.6% growth and slight gains in Italy, offsetting a 0.1% contraction in Germany and steady growth in France. ; ;

German inflation is expected to rise to 2.7% year-on-year in January but remain unchanged month-on-month, while Spain’s annual inflation is expected to ease to 2.6%.

[geotargetedbrokercarousel]

Trading Tips:

The Euro’s gains will remain cautious until investor confidence in the Eurozone’s economic recovery returns, which could take some time, so beware of Euro gains.

US Dollar Takes Losses Amid Trump’s Policies

According to Forex trading, the US Dollar Index (DXY) recorded its worst weekly performance in 14 months as currency traders grapple with a lot of talk about tariffs, without any real action, from US President Donald Trump. According to licensed trading platforms, the US Dollar has declined by 1.7% last week, its strongest weekly decline since November 2023. The US Dollar's losses accelerated after Trump appeared to soften his stance on tariffs against China. Additionally, Trump affirmed that he favours lowering US interest rates. ;

[graph_5754]

EUR/USD Technical Analysis Today:

Despite the recent gains, the EUR/USD bulls still have a long way to go to control the trend according to the daily chart. Moreover, they must first move towards the resistance levels of 1.0600 and 1.0760 to confirm control of the trend. Conversely, on the same timeframe, a return to the vicinity of the 1.0340 support level threatens the Euro-Dollar's upward rebound attempts. Furthermore, we expect the currency pair to move in narrow ranges until it reacts to the events and data outlined above. The Relative Strength Index is currently in a neutral position, and the MACD still has more ground to cover before confirming an upward shift.

Ready to trade ;our ;EUR/USD daily forecast? ;Here’s ;a list of some of ;the top forex brokers in Europe ;to check out. ;

Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.