On 22nd February 2024, the Euro saw a significant rise against the US dollar, reaching up to 1.0850. This was due to heightened risk sentiment, coupled with a strengthening economy in the Eurozone. While solid growth figures and declining unemployment rates contribute to this surge, the US dollar remains vulnerable amidst increasing trade tensions.
This uptrend continued, marking a monthly peak beyond the 1.0850 mark. Similarly, the positive trend is expected to persist, following the release of encouraging manufacturing and services PMI figures from the Eurozone, Germany, and the US.
Despite a stable domestic economy, the USD faced difficulties generating demand, thus seeing a decrease in value. This dip can be attributed to risk positivity and rising optimism over the deployment of COVID-19 vaccines, developments which have curbed the demand for safe-haven assets like the USD, favoring riskier currencies instead.
Market sentiments swayed further after strong earnings from Nvidia, which led to a rise in technology equities and futures of S&P and Nasdaq. Investor attention then shifted towards preliminary PMI reports from the Eurozone, Germany, and the US. Despite contractions in the German and Eurozone’s private sectors, the US showed consistent growth, hinting towards potential stability in its markets.
The EUR/USD pair may maintain its bullish momentum if Eurozone PMIs rebound stronger than anticipated. However, should the PMIs disappoint, they might dampen future pair gains, making continued vigilance regarding upcoming PMI reports and significant economic changes crucial for investment strategies.
In the meantime, technical indicators show that the EUR/USD has surpassed the 200-period Simple Moving Average on the 4-hour chart. If this trend continues, it could signify a possible overbought condition, necessitating a review of strategies to optimize potential gains while minimizing risks.
Investors are advised to conduct comprehensive research before diving into open market investments, given the significant foreseeable risks. While informed decisions can mitigate these risks, it remains crucial to consider all potential losses and expenses, as investing always holds intrinsic uncertainties.
