FX.co ★ Forecast for EUR/USD on January 17, 2024

EUR/USD

Under the continued verbal pressure from the Fed, convincing investors of the need for a slow pace of rate cuts, the probability of a rate cut in March decreased from 66.1% to 61.0%, and the probability of a rate cut in May decreased from 65.7% to 55.6%. Meanwhile, the yield on 5-year US Treasury bonds increased from 3.83% to 3.93%.

Investors also worry about the new US missile strike on Yemen, which threatens to completely block the shipping route through the Suez Canal. Oil prices fell yesterday, apparently due to investors fleeing from risk. The S&P 500 lost 0.37%, and the euro fell by -0.65% (73 points). As talks of a possible war between the US and China (due to the coming to power in Taiwan of the pro-American president Lai Ching-te) have emerged, US stock indices may grow.

Today, the December CPI data for the eurozone will come out, and forecasts say it will be 2.9% year-on-year, higher than the previous 2.4%. In the US, retail sales data for December will be 0.4%, while industrial production will be 0.0%.

Risk appetite may surge as early as today.

Euro may break above the resistance level of 1.0905. However, if the price falls below 1.0825 on negative news, which would also mean breaking the MACD support line, the bearish sentiment will persist, leading to a move towards 1.0730 or the embedded price channel line.

On the H4 chart, the pair remains below the balance and MACD lines, and the Marlin oscillator continues to move downward. To provoke growth, the pair does not necessarily have to rebound from the MACD line, as it did on December 8 (gray circle on daily). Wait for upcoming news and the market's reaction to it.