Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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EURUSD: Macroeconomic Price Analysis for 2023

EURUSD halted a steep decline in 2022, which saw the exchange rate trade under parity. 

The European Central Bank finally moved ahead with interest rate hikes and quantitative tightening plans, and the pair rallied to 1.06.

EURUSD - Monthly Chart

EURUSD - Monthly Chart

The monthly chart on EURUSD shows resistance at the 1.10611 level, supported in 2020. This could actually be a barrier for a January drop. Still, traders should note the 1.06 level as being essential. We also have 2017 support at 1.0350, which supports a slight pullback. A move below that can target the parity level again. 

The year in the EURUSD was summarised by an aggressive Federal Reserve, which raised interest rates sharply to 4.25%. The ECB sat on their hands for over a year but finally kicked into gear around September as German inflation soared above 10%. That coincided with the Fed saying they would slow the rate hikes. 

Fed Chair, Jerome Powell, did prop up the dollar by saying that rates would be "higher for longer," and that ended market hope for a pivot. 

However, ECB voting member Klaas Knot signalled that the Fed is near the end of its tightening cycle while the ECB has more to do. With five policy meetings between now and July 2023, Knot said that the central bank had "quite a decent pace of tightening" ahead. 

"The risk of us doing too little is still the bigger risk," Knot told the UK's Financial Times. "We are just at the beginning of the second half." 

So, the theme for 2023 is for an ECB tightening cycle to catch up to the Fed. However, macro fears could hurt the Eurozone with a potential recession and a Russian ban on oil exports. The year-end closing is important in the EURUSD around the 1.06 level, which will be critical for the pair's future.

Last Updated: 29/12/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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