FX.co ★ Hot forecast for EUR/USD on 03/01/2023

One quick glance at the euro's chart is enough to understand the results of the European Central Bank meeting. It isn't crucial that the ECB hiked interest rates by fifty basis points. What is important is that ECB President Christine Lagarde pledged a further rate hike in March and that the Bank is committed to maintaining its restrictive policies. In other words, the ECB will raise its base rate to 3.5%, after which it will begin preparations for easing monetary policy. Meanwhile, Federal Reserve Chairman Jerome Powell indicated that interest rate cuts are not to be expected in 2023. The ECB will be the first to lower rates. This alone is enough to change the trend of the dollar's weakening into a steady growth.

Changes in the rate (Europe):

However, today, the U.S. currency will probably edge down. The reason for this will be the contents of the United States Department of Labor report. Mostly because the unemployment rate may rise from 3.5% to 3.6%. Even though this is just a slight deterioration in the labor market, it is still a deterioration. In addition, 190,000 new jobs are seen to be created outside of agriculture. Given the demographics and level of economic activity, this is not enough to maintain labor market stability. So the unemployment rate will continue to rise.

Unemployment rate (United States):

Due to the strong news background, there is speculative interest in the pair. In the course of which, the euro fell by more than 130 points. And as a result, it fell below 1.0900.

On the four-hour chart, the RSI technical indicator, which was in the overbought area the day before, is now below the 50 line. This clearly shows the strength of the downward momentum, which emerged yesterday. On the daily chart, the RSI ignores the local changes in the price, and continues to move in the upper area of 50/70.

On the four-hour chart, the Alligator's MAs are intersecting, which points to stagnation. On the daily chart, the indicator is pointing to the bullish sentiment and the MAs are headed upwards.

Outlook

A sharp change in the euro exchange rate could lead to an oversold status in the short term. This in turn may lead to a slowdown in the downward momentum, which in turn would lead to a technical pullback. However, speculators may ignore the technical signals, in this case, keeping the price below 1.0850 may direct the price towards 1.0800.

In terms of the complex indicator analysis, we see that in the short-term and intraday periods, indicators are providing sell signals because of the recent momentum. In the mid-term period, the indicators are ignoring the local changes in the price and pointing to the bullish sentiment.