EUR/USD Stable, Volatile After Data Release
EUR/USD held steady above 1.1850 and traded sideways around 1.1870 during the Asian session on Friday morning. This limited movement occurred as market participants awaited the release of key economic data, namely the preliminary estimate of fourth-quarter Eurozone GDP and US inflation (CPI), which will be released the same day.
The US dollar tended to move within a narrow range after the latest economic data provided mixed signals. US retail sales were reported stagnant in December, indicating weakening demand. However, the January Nonfarm Payrolls (NFP) employment report was stronger than expected. This condition prompted the market to reconsider the direction of the US central bank's interest rate policy and await further guidance from the CPI inflation report.
In Europe, the European Central Bank (ECB) maintained its benchmark interest rate at 2.0% for the fifth consecutive year, in line with market expectations. Several market participants are beginning to increase confidence that the ECB's monetary policy will remain stable throughout this year. Expectations of stable interest rates, and even a possible increase next year, are considered a supportive factor for the euro.
Meanwhile, Eurozone GDP in the fourth quarter is projected to grow 0.3% quarter-on-quarter and 1.3% year-on-year. If the data shows a greater-than-expected economic slowdown, the euro could potentially come under pressure against the US dollar in the short term. Conversely, if GDP is stronger and the US CPI declines, the EUR/USD pair could potentially gain momentum as the market could reassess the likelihood of US monetary policy tightening. (asd)
Source: Newsmaker.id
