EUR/USD moving lower on soft European data
After climbing post-FOMC, EUR/USD tumbles towards 1.0800 amid soft German manufacturing data and dovish BoE outlook. With 56% of traders long, market eyes future movements amidst US dollar strength and European economic concerns.
EUR/USD reversed towards 1.0800 after central bank meetings
Last week, EUR/USD experienced a notable reversal, climbing above 1.0900 after Wednesday's Federal Open Market Committee (FOMC) meeting, only to undergo a sharp decline in the subsequent days. This shift highlights the impact central bank decisions and geopolitical events can have on currency pairs, emphasizing the importance for traders to stay informed and agile in their strategies.
Soft German manufacturing data shook confidence
Confidence in the Euro took a hit when German manufacturing Purchasing Managers' Index (PMI) reported a 5-month low on Thursday, signaling a deceleration in one of the Euro Area's key economies. This news contributed to the EUR/USD's decline, erasing the gains made after the FOMC. Such data points are crucial for traders to gauge the overall health of an economy and anticipate potential movements in currency valuations.
Dovish BoE meeting boosted USD
The Euro experienced further declines against the dollar following a dovish outlook by the Bank of England, which included warnings of impending rate cuts that might precede those in the US. This development bolstered the USD as market participants shifted their positions in anticipation of differing monetary policy paths between the US and UK, and affecting the neighboring Euro Area.
How far could EUR/USD fall?
Historical bounds for EUR/USD in the past year include prices as low as 1.0500 and as high as 1.1200 - both hit in 2023. This places the current 1.0800 level squarely in the middle of the range, giving reason for a move in either direction.
56% of EUR/USD traders are long
Current sentiment among IG clients reveals that 56% of traders holding positions in the EUR/USD market are long, suggesting a prevailing belief in the Euro's potential to strengthen against the USD. This aggregate sentiment, derived from real-time trading data, offers insights into broader market trends, potentially indicating anticipated movements in the EUR/USD pair based on collective trader behavior.
How to trade EUR/USD
- Open an account to get started, or practice on a demo account
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- Open, monitor, and close positions on EUR/USD
Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
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