In the Tokyo market, the euro rose to 1.0534, breaking the previous high of 1.0522 and triggering some stop-loss orders. However, it then reversed and started to fall, with the upper levels remaining heavy.
When the European market opened, the German IFO for December was released and came in below expectations, reaching the lowest level since May 2020. Additionally, the December ZEW was also below expectations, which accelerated euro selling. The euro dropped to 1.0480. Later, with the rise in U.S. long-term interest rates, the euro bounced back to 1.0515, but the upper levels remained heavy, and it closed in the upper 1.04 range.
At today’s FOMC meeting, many expect a more hawkish tone, with a reduction in the number of rate cuts expected for next year. On the other hand, the ECB is expected to continue aggressive rate cuts due to political instability in Germany and France, as well as the weakness of the German economy.
Even if there are some short-term fluctuations, the selling of the euro is expected to continue.
EUR/USD Expected Range: 1.0540 – 1.0400
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