The dollar shows mixed movements as European trading approaches. The euro and yen are slightly stronger, while the antipodes lag due to subdued risk sentiment, despite US futures increasing after recent heavy selling.
The European Central Bank’s policy decision indicates a potential pause in April, with the possibility of future cuts depending on market conditions. The EUR/USD peaked at 1.0853 before settling below important levels, with 1.0800 and the 61.8 Fib retracement at 1.0817 proving to be key markers.
European Trading Outlook
European trading will be quieter with limited data, awaiting the non-farm payrolls release. Scheduled data includes Germany’s January industrial orders, UK house prices, France’s trade balance, and Eurozone’s Q4 final GDP figures.
With trading in Europe approaching, the dollar remains without a clear direction, as some currencies find strength while others continue to lag. The euro and yen have firmed, though movements lack force. Conversely, currencies like the Australian and New Zealand dollars struggle, weighed down by weak risk appetite. This is despite an uptick in US futures, which have managed to recover slightly following recent sharp declines.
A major focus remains on the European Central Bank, which has hinted that rates may hold steady at the next meeting in April. The potential for cuts exists but hinges on incoming economic developments rather than certainty at this stage. Markets reacted by briefly pushing EUR/USD to 1.0853, though it failed to maintain altitude. Price levels at 1.0800 and 1.0817 now stand out, the latter aligning with the 61.8% retracement on Fibonacci charts. These points are ones to watch as trading continues.
The coming European session is set for a slower pace, with no major shifts anticipated until the release of US non-farm payrolls data. Until then, attention will be on figures from Germany concerning January’s industrial orders, property price data from the UK, France’s trade balance, and final GDP numbers for the euro area in the previous quarter. These could provide near-term directional cues, though the primary market driver remains the upcoming report from the United States.
Market Sentiment And Expectations
For traders navigating this period, the signals are straightforward. Price action suggests that currency movements are reactive rather than displaying outright conviction. The euro’s inability to hold gains at higher levels underscores the need for further validation before resuming an advance. Meanwhile, the divergence between a recovering US futures market and underperforming risk-sensitive currencies signals that sentiment remains fragile.
With the ECB leaning towards a wait-and-see approach, any unexpected economic figures could influence expectations further. A weaker set of data from Europe may add to the argument for easing later in the year. Conversely, stronger numbers could challenge that view. Until payrolls data provides the next major catalyst, markets may continue oscillating within familiar ranges.
