The Euro Remain Steady Despite Weekly Loss, but the recent dip in Bitcoin continues to be a major catalyst for volatility.
- EUR/USD Ends the Week with a Lower Consolidation
- The Fed’s approach is driving the dollar’s strength.
- The NFP Numbers Are Crucial For The Stock Market
As concerns about Eurozone inflation grow and the Dollar is bolstered by a more hawkish Federal Reserve, the Euro FX market has remained robust in the face of pressure to cling on to the 1.13 mark. This divergent approach from the ECB has left many people perplexed, as seen by the fact that the pair has been trapped in a narrow range in recent weeks. Meanwhile, with vital job data anticipated later today, Wall Street markets are expected to begin modestly higher. These might help to calm down some recent market turmoil.
The euro falls, but remains above a key level.
Those who trade the Euro in forex have witnessed a lot of fluctuation in the months coming up to the New Year. In a short amount of time, the Euro went from strong to weak below 1.10, while the USD went from strength to strength via the Delta and Omicron COVID-19 waves. While the common currency is still under pressure from the greenback, it has managed to keep its position.
Yesterday’s pressure came in the aftermath of Fed meeting minutes that revealed a more hawkish stance than many had anticipated. This sparked fears that additional rate rises might be on the way in 2022. Normally, the Dollar serves as a safe haven during times of uncertainty, but this position has been put to the test more recently during the epidemic.
Dollar traders are wary of the Fed’s hawkish stance.
When the Fed takes a hawkish stance, the Dollar tends to gain over time. This is frequently the case for forex brokers, since non-US assets may become less appealing. A highly supportive Federal Reserve early in the pandemic period resulted in a substantially lower Dollar as money were pushed in to help the economy. Jerome Powell and his advisers are taking a different strategy today.
As predicted, rate rises are on the way. The Fed minutes from Thursday may have taken traders off guard in the short term, but once the news is digested, and the NFP statistics are expected to support such an approach later today, the Dollar might well climb higher in the day ahead.
Wall Street is also waiting for the NFP figures.
Not just currency traders are looking forward to the NFP job figures. This data might also have a huge influence on how the markets complete the first full trading week of the new year on Wall Street. The week has been mainly bearish for markets, with key indexes underperforming.
The Dow Jones Industrial Average fell over 0.5 percent Wednesday, and the S&P 500 also fell. With additional bullish trade on Friday, both main indexes are now attempting to escape a negative week. For the NASDAQ, things are getting worse. The tech-heavy index has taken a beating this week and will be seeking to recoup some of its losses on Friday.