The EURUSD currency pair was trading up just 10 pips at writing, giving up a massive chunk of its earlier gains where it traded as high as 50 pips higher. The currency pair bounced off a resistance zone seen on the 1-hour chart.
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The currency pair’s lacklustre performance today was expected, given the empty news dockets from Europe and the United States. Investors look forward to tomorrow when the US is scheduled to release its CPI data, which tends to inform the Fed’s interest rate decisions.
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The EURUSD pair was left to the whims of investors as buyers and sellers fought for control, with the bulls winning the battle in the morning hours before the bears took over in the afternoon and during the American session.
Therefore, today’s performance was primarily driven by investor sentiment due to the lack of significant news releases from the Eurozone and the US. Looking at the Dollar Index, we can see that the performance of the EURUSD pair was the index’s inverse.
The dollar index fell in the morning hours as the euro rallied but shifted course in the afternoon session as the index rallied higher, forcing the euro to fall against the US dollar. Even though the index measures the dollar’s performance against a basket of currencies, the euro carries the most weight among the currencies.
Meanwhile, investors expect the Federal Reserve to pause rate hikes at its meeting later this week. In contrast, unlike its US peer, the European Central Bank is expected to maintain its hawkish rhetoric and keep hiking rates.
The US Federal Reserve will announce its interest rate decision on Wednesday. In contrast, the ECB will announce its rate decision on Thursday in a massive week for the EURUSD and the financial markets in general.
For now, investors are looking forward to tomorrow’s US inflation figures, which could provide a clue as to whether the Fed will hike rates on not. High inflation figures could lead to a rate hike, while low inflation data could influence a pause in US rate hikes.
*This is not investment advice.
The EURUSD price chart.
The EURUSD currency pair was trading up over 10 pips (0.09%), having given up some of its earlier gains.
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