EUR/USD Ends Year with Momentum
EUR/USD Rides High into 2024 as Dovish Fed Fuels Dollar Weakness
EUR/USD is finishing 2023 with bullish momentum as an increasingly dovish Federal Reserve has fuelled dollar weakness.
In December, the Fed kept rates on hold at 5.25-5.5% for the third consecutive meeting. Their acknowledgment of a decelerating economy and alleviating inflationary pressures has led them to contemplate an additional rate cut based on their internal projections.
The Fed's projection now includes an additional rate cut in 2024, totalling 75 basis points of easing compared to 50 basis points forecasted in September. Notably, the predicted final rate hike previously anticipated for September is no longer in the picture, indicating an expected Fed funds rate of 4.6% by the end of 2024, down from 5.1%.
This dovish Fed stance has driven EUR/USD up by over 5% in the last quarter, reflecting traders' adjustments in response to the Fed's expected rate cuts.
EUR/USD Respecting Fibonacci Levels
EUR/USD’s daily candle chart (below) reveals that the market is currently respecting key Fibonacci levels…
The Oct-Nov rally can be used to draw Fibonacci retracements and extensions. Earlier this month, EUR/USD pulled back to the 50% retracement level and has since rallied to new trend highs.
We can now use the Fibonacci extension tool to estimate how much further the current rally may go. The 127% and 141% extension levels coincide with a major area of resistance created by the summer high.
EUR/USD Daily Candle Chart:
Past performance is not a reliable indicator of future results
Bullish Consolidation Box Forms on Hourly Candle Chart
If we drill down to the detail of the hourly candle chart (below), the strength of EUR/USD’s recent momentum becomes even more evident – with prices trending cleanly above the 50-period simple moving average (SMA).
Recent price action has seen EUR/USD’s uptrend take a pause and prices have started to form a small ‘consolidation box’. This pattern, within the context of a strong uptrend is typically a bullish sign – indicating that EUR/USD could end 2023 near its recent highs.
EUR/USD 1hr Candle Chart:
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
EUR/USD is finishing 2023 with bullish momentum as an increasingly dovish Federal Reserve has fuelled dollar weakness.
In December, the Fed kept rates on hold at 5.25-5.5% for the third consecutive meeting. Their acknowledgment of a decelerating economy and alleviating inflationary pressures has led them to contemplate an additional rate cut based on their internal projections.
The Fed's projection now includes an additional rate cut in 2024, totalling 75 basis points of easing compared to 50 basis points forecasted in September. Notably, the predicted final rate hike previously anticipated for September is no longer in the picture, indicating an expected Fed funds rate of 4.6% by the end of 2024, down from 5.1%.
This dovish Fed stance has driven EUR/USD up by over 5% in the last quarter, reflecting traders' adjustments in response to the Fed's expected rate cuts.
EUR/USD Respecting Fibonacci Levels
EUR/USD’s daily candle chart (below) reveals that the market is currently respecting key Fibonacci levels…
The Oct-Nov rally can be used to draw Fibonacci retracements and extensions. Earlier this month, EUR/USD pulled back to the 50% retracement level and has since rallied to new trend highs.
We can now use the Fibonacci extension tool to estimate how much further the current rally may go. The 127% and 141% extension levels coincide with a major area of resistance created by the summer high.
EUR/USD Daily Candle Chart:
Past performance is not a reliable indicator of future results
Bullish Consolidation Box Forms on Hourly Candle Chart
If we drill down to the detail of the hourly candle chart (below), the strength of EUR/USD’s recent momentum becomes even more evident – with prices trending cleanly above the 50-period simple moving average (SMA).
Recent price action has seen EUR/USD’s uptrend take a pause and prices have started to form a small ‘consolidation box’. This pattern, within the context of a strong uptrend is typically a bullish sign – indicating that EUR/USD could end 2023 near its recent highs.
EUR/USD 1hr Candle Chart:
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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