The Euro (EUR) alternates gains with losses against the US Dollar (USD) at the beginning of the week, prompting EUR/USD to gyrate around the 1.0660 r
and persist in anticipating the possibility of interest rate reductions by the Federal Reserve occurring sometime in the second quarter of 2024.
The major attention, on the other hand, is presently on the critical 200-day SMA at 1.0827. If the pair breaks through this level, a bullish momentum may develop, leading to a test of the provisional 55-day SMA at 1.0922 ahead of the weekly high of 1.0945 . As a result, this scenario may open the way for a rally towards the psychological level of 1.1000 and the August top of 1.1064 . If the pair clears this region, it may relieve some of the bearish pressure and go for the weekly peak at 1.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
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