Today, the EUR/USD will be affected by the Purchasing Managers’ Index reading for the services sector for both the Eurozone and the U.S.
On the other hand, the U.S. Federal Reserve (Fed) held interest rates at 5.5% after its most recent monetary policy meeting, in line with market expectations.
According to the statement released by the U.S. Federal Reserve, the central bank expects it will be appropriate to reduce the target range once there is complete certainty that inflation will remain stable at 2%.
Last week, attention was focused on Fed Chairman Jerome Powell’s press conference, which emphasized that there had been six good months of inflation data and that the Fed expects this behavior to continue. However, Powell also remarked that before making any interest rate cuts, he wants the market to show a positive trend. So, for now, the market may remain flat.
Technical analysis of the EUR/USD for February 5th
The EUR/USD pair’s behavior continues to be marked by a downtrend. It seems to settle below the psychological support level of 1.0800, which may be a sign that in the coming days, the EUR/USD pair will begin to suffer from oversold conditions in the market. Therefore, if the U.S. dollar (USD) strengthens by taking advantage of the Federal Reserve’s monetary policy, the greenback may be seen as a haven against other solid currencies and move between the levels of 1.0740 and 1.0660.
On the other hand, analyzing the daily performance on the chart, a bounce with an uptrend will not occur until the EUR/USD price returns to the psychological resistance located at 1.1000.
As mentioned, today’s EUR/USD price action will be influenced by the Purchasing Managers’ Index readings for the services sector. We must wait to see whether this reading means a risk or a market opportunity for currency traders.
