Euro retreated from 1.1360
At the end of the week, the major currencies showed mixed dynamics. The dollar fell against the Japanese yen by 1.16%, the Swiss franc - by 0.48%. The New Zealand dollar weakened 1.31%, the British pound - by 0.86%, the euro - by 0.62%, the Australian dollar - by 0.53%, the Canadian dollar - by 0.73%,
On Friday, January 21, following the results of trading, the euro rose by 0.29% to 1.1345. At the beginning of the American session, the price rose to 1.1360, then rolled back. Major U.S. indices fell sharply on Friday after Netflix's share price fell 22% following a weak report. The S&P 500 (-5.7%) and Nasdaq (-7.6%) recorded the biggest weekly percentage drop since the start of the pandemic in March 2020. On Friday, the euro, along with the franc and the yen, also acted as a protective asset as a funding currency (selling American stocks - exchange of dollars en euro - sending euros to the eurozone to return cheap loans).
On January 18, the EUR/USD pair returned to the consolidation range between the levels of 1.1220 and 1.1386, where it had been for almost two months. If buyers manage to rise above 1.1385 again, the outlook for growth will improve. On the other hand, a break below 1.11285 should open the way for new losses and a test of 1.1220.
Scheduled statistics (GMT +2):
At 10:15 France is to publish preliminary data on the index of business activity in the manufacturing and services sector for January.
At 10:30 Germany will publish preliminary data on the index of business activity in the manufacturing and services sector for January.
At 11:00 Eurozone will publish preliminary data on the index of business activity in the manufacturing and services sector for January.
At 11:30 the UK is to publish preliminary data on the index of business activity in the manufacturing and services sector for January.
At 17:45 the US is to publish preliminary data on the index of business activity in the manufacturing and services sector for January.
At the time of writing, the major currencies are trading in the red. US stock index futures are colored green. The growth is more than 0.65%. The focus of market participants is the US Federal Reserve meeting. The US Central Bank is expected to keep its rate close to zero and prepare the markets for monetary tightening in March. In March, the Fed is due to complete its cheap dollar (QE) program and raise rates by 25 bp for the first time, to 0.25%-0.2% per annum. In total, 3-4 rate increases are expected this year.
During Asian trading, the euro / dollar fell to 1.1314. In crosses with the euro, the situation is favorable for buyers. The trend line passes through 1.1310. She acts as support until the Fed meeting. A surge in volatility is possible after the release of PMI indices in the manufacturing and services sectors in the euro area. I expect a slight price recovery to 1.1340.
Summary: on Friday, the euro/dollar pair closed with growth. The euro acted as a funding currency, while the dollar, yen and franc were defensive assets amid the collapse of US stock indices. During Asian trading, the euro / dollar fell to 1.1314. The focus of market participants is the US Federal Reserve meeting. We expect a slight price recovery to 1.1340.