Event to watch out for today:
17:00 EET. USD – ISM Manufacturing Index
EURUSD:
EUR/USD paused its four-day losing streak, trading near 1.0270 during the Asian session on Friday. European Manufacturing Purchasing Managers’ Index (PMI) data on Thursday fell short of expectations, which only added to Euro traders’ concerns following a soft speech from European Central Bank (ECB) Governor Yannis Stournaras later in the day.
According to ECB Governing Council member Yannis Stournaras, the ECB intends to smoothly cut interest rates until 2025. According to Stournaras, the ECB rate is expected to be somewhere in the neighborhood of 2% at the end of this year. As the Federal Reserve (Fed) will cut interest rates much more slowly than previously expected in 2025, the EUR interest rate differential will widen significantly by the end of the year, putting downward pressure on EUR/USD in the long term. This is in line with the expectations of some analysts who are calling for the euro to reach parity with the US dollar as early as this year.
Pan-European PMI results for December fell slightly to 45.1 against expectations of holding at 45.2. While the data itself had relatively little impact, it helped underscore the growing likelihood that the European Central Bank (ECB) will accelerate rate cuts to support the European economy, even as gasoline prices hit their two-year highs, further confounding Europe’s economic outlook.
The only significant data on Friday’s economic calendar is the results of the ISM US manufacturing PMI, which is expected to remain at the declining 48.4 reading for December.
Trading recommendation: Watch the level of 1.0250, if it is fixed below consider Sell positions, if it bounces back consider Buy positions.
Origin: FreshForex
