saved Euro. Forecast as of 02.02.2024


The EURUSD has been more influenced by positive corporate reporting than by the Fed's reluctance to cut rates in March. However, the future direction of the pair will depend on the US jobs report. Let's analyze the Forex outlook and develop a trading plan.

Today's fundamental US dollar forecast

What holds more significance for the EURUSD, the Fed's hesitation to raise the federal funds rate in March or Meta Platforms' decision to pay dividends? Once again, greed triumphed over fear in the financial markets, and the positive corporate reporting from three major companies led to a swift recovery in the S&P 500, causing the euro to rise by a hundred pips from the $1.079-$1.08 range.

In January, we witnessed the paradoxical rally of both the broad stock index and the US dollar, thanks to the exceptional strength of the US economy. However, with jobless claims reaching their highest levels since mid-November and ISM manufacturing activity consistently falling below the critical level of 50 for the past 15 months, it indicates a sign of weakness. As Treasury yields decline and the S&P 500 rebounds from its worst day since September, EURUSD demonstrates its lack of concern towards Jerome Powell.

It is understandable that the Fed Chair is cautious and prefers to buy time by stating that March is not the likely timeframe for initiating monetary expansion. Starting rate cuts too early could lead to inflationary pressures, while delaying them could result in increased unemployment. The situation is further complicated by the upcoming presidential elections. Republicans accuse the Federal Reserve of intending to support the current government through loose monetary policies, while Democrats are puzzled as to why Jerome Powell isn't cutting rates amidst plummeting inflation.

EURUSD trading plan today

The US dollar could still recover if the US jobs report is strong, signaling the US's economic strength. If so, the EURUSD will go back to the range of 1.08-1.085. Otherwise, weaker-than-expected employment data will increase the chance of the Fed's rate cut in March, sending the euro above $1.09.

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