The Euro Dollar pair remains under pressure during the partial feedback to the Euro Area’s Consumer Price Index (CPI), with the exchange rate shaping a series of lower highs and lows ahead of the US Non-Farm Payrolls (NFP) report as it fails to preserve the January range.
It remains to be seen if the news on the NFP report will impact the short-term outlook of EURUSD as the US economy is anticipated to add 50K jobs in January, and a comeback in employment may generate a bullish reaction in the US Dollar as it encourages the Federal Reserve to retain the current course for monetary policy.
It seems as though that the FOMC committee will depend on on its current tools to realize its policy targets as the central bank asserts that “our forward guidance for the federal funds rate along with our balance sheet guidance will ensure that the stance of monetary policy remains highly accommodating, and Chairman Jerome Powell and Co. may stick to the same script at the next interest rate decision on March 17 as the committee persists “committed to using our full range of tools to support the economy.”
Sequentially, the US Dollar may carry on reflecting an inverse relationship with investor confidence as the Fed stays on path to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month,” and it looks as though the recent shift in retail sentiment is likely to be short lived as the crowding behavior from 2020 resurfaces.
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