EUR/USD remains within the low-1.08-1.09 range at the week’s start. US growth concerns have led to declining yields, yet the broad USD remains strong due to risk-off sentiment.
In Germany, the Greens may delay support for a debt package in parliament, but eventual backing is anticipated. Confirmation of the debt package or a potential ceasefire in Ukraine could further uplift the Euro.
Market Focus On US Labour Data
Market focus today includes January JOLTS job openings for insights into the US labour market. A discussion on the implications of a ‘Mar-a-Lago Accord’ suggests it could affect the USD, although such an event is deemed unlikely.
There is a tactical bias towards upside risk in EUR/USD, with the US cyclical growth narrative increasingly influential.
At the start of the week, the EUR/USD pair remains confined within a narrow range, hovering between low-1.08 and 1.09. Concerns surrounding the pace of economic expansion in the United States have led to a decrease in bond yields. Even so, the broader US dollar stays firm, as investors continue to move away from riskier assets.
Political developments in Germany could contribute to short-term Euro movement. Any delay in parliamentary support for the proposed debt package due to hesitations from the Greens might create some volatility. However, eventual approval appears to be the most probable outcome. A formal green light on the debt package, or unexpected progress towards a ceasefire in Ukraine, could provide additional support for the common currency.
Market participants are also closely monitoring today’s release of January’s JOLTS job openings. This report provides an indication of the current state of the US labour market, offering critical insight into labour demand. A figure that deviates materially from expectations could set the tone for broader market sentiment and, in turn, currency movements.
Additionally, there has been some discussion surrounding the potential impact of what is being referred to as a “Mar-a-Lago Accord”. Such an agreement could have meaningful consequences for the dollar, though the likelihood of anything materialising in the near term remains slim. Nonetheless, the topic is worth tracking, particularly for any indications that discussions may be moving beyond speculation.
Tactical Outlook For EUR USD
From a tactical perspective, there is a bias towards upside risk in EUR/USD. Economic momentum in the US appears to be playing an increasingly important role in influencing the pair’s trajectory. If incoming data continues to challenge existing narratives around the strength of the US cycle, traders will need to recalibrate their expectations accordingly.
