Generally, the euro (EUR) is considered one of the weaker currencies when the U.S. dollar (USD) is trending towards strength. However, the view of U.S. economic strength may open the door for a prolonged period of dollar-side profitability.

After robust U.S. employment data in January, analysts now believe that the anticipated easing in demand might soon materialize, with a risk that forthcoming data could surpass market expectations. All of this may affect the EUR/USD relationship.

Dollar exchange rates will likely rise if the incoming data reinforces the signal in the most recent U.S. employment report.

Apart from the euro, other currencies, such as the Canadian dollar and the franc, are vulnerable to dollar strength, which may be at risk if their economic data is weaker than expected.

Similarly, the measures taken concerning the Federal Reserve’s policy should also be analyzed. For example, banks in the G-10 countries may be forced to cut rates ahead of the Fed if their data from these countries does not meet expectations and U.S. data remains strong.

To give context on the Eurozone side, Germany has reported that its industrial production fell by 1.6% in December against expectations of a 0.4% decline, and in turn, November’s decline was 0.2%. This was primarily due to exports failing to meet targets, alongside underwhelming imports and industrial output. As a major economy in the eurozone, Germany’s performance significantly influences the euro’s value and, consequently, the EUR/USD exchange rate.

Technical analysis of the EUR/USD for February 12

Looking at the daily chart performance, the trend of the EUR/USD pair is still downwards, moving even below the psychological level of 1.0800, and the trend may help to deepen these levels. Additionally, the indicators will only reach saturation levels ideal for selling after reaching support levels at 1.0700 and 1.0635.

On the other hand, in the same period, a bearish market trend reversal will not occur after first reaching the psychological resistance level at 1.1000. For now, the market is moving without essential data. Everything is focused on the data to be published by the United States in the coming days.

Let’s see how this impacts both the U.S. and European markets. It should also be noted that investors in these markets are waiting to see if both the Federal Reserve and the European Central Bank will lower interest rates. Questions arise regarding where and by how much they will be adjusted. For now, this possibility seems distant, and we must stay attentive to developments not only this week but also until the end of the month.