As US Dollar Index declines and German Inflation is being watched, EUR/USD rebounds rapidly to approach 1.0680.

Market Analytics and Considerations

Key Notes

• As the USD Index has weakened, the EUR/USD has seen an increase in bids after falling to just below 1.0680.
• Ahead of the German Inflation, the key currency pair may maintain its sideways behavior.
• S&P500 futures recovering suggests that there are bargains to be had at cheaper prices.

After falling to around 1.0650 in the Asian session, buyers have started to show enthusiasm in the EUR/USD pair. The main currency duo has gained as the US Dollar Index’s comeback motion has slowed. In general, the main is showing lateral displacement auction pattern as traders wait for new momentum from the publication of the Eurozone Harmonized Index of Consumer Prices (HICP) statistics.

After failing to continue its rebound over the current barrier of 103.50, the US Dollar Index has encountered selling pressure. The crucial support level at 103.00 will possibly be challenged again if the USD Index continues to plunge dramatically. S&P500 futures, meantime, have dramatically returned after a shaky start to the session. The presence of valuation at lower tiers is indicated by a reactive buying action close to lower tiers. This demonstrates a clear improvement in market participants’ appetite for risk.

The agreement predicts that the German HICP (Dec) will increase to 11.8percentage points from the previous release’s 11.3%. Rising prices have increased in Germany as a result of rising wages. President of the European Central Bank (ECB) Christine Lagarde attributed more fuel to tougher inflation to rising pay levels. According to Reuters, ECB President stated that the central bank must stop this from causing existing massive inflation to rise much more.

On the American front, attention will concentrate on the Federal Open Market Committee (FOMC) report. Investors will monitor the current economic environment and the policy forecast for CY2023 in order to make wise judgements.

Technical Parameters & Indicators (Jan 3)