The Euro pulls back below 1.0640 after another rejection at the 1.0660 resistance area.Concerns about China and escalating tensions in Ukraine have dampened market optimism.
EUR/USD seen at 1.0892/10944 in Q1, 2023 – Credit Suisse.The Euro has turned lower during Thursday’s European trading session, unable to breach 1.0660/70 resistance in the fourth consecutive attempt this week. The pair remains trading within a 60-pip horizontal range on a thin post-Christmas market.
COVID-19 and Ukraine’s war dampen appetite for risk
Investors’ moderate appetite for risk seen in the first half of the week faded on Thursday, as reports from the surging coronavirus infections in China are casting doubts about the economic recovery of the Asian country.
The exponential increase in COVID-19 cases since the Chinese authorities relaxed its Zero-COVID policy is overwhelming the country’s healthcare system. This has raised suspicion about China’s transparency which has forced the US, Italy, and India, so far, to impose mandatory tests on arrivals from China.
Furthermore, tensions are escalating in Ukraine with news reporting heavy shelling in Kyiv and other cities after the Kremlin refused to accept Zelenski’s 10-point peace plan., which is putting additional negative pressure on the Euro.
On the economic calendar, in absence of key Eurozone data, the US US weekly jobless claims and crude oil stocks figures might offer a fresh impulse to Forex markets.
EUR/USD is aiming to 1.0892/1.0944 – Credit Suisse
From a technical point of view, analysts at Credit Suisse see the pair biased higher over the next months: “We expect further strength in Q1 2023, reinforced by the large top in front-end US/Europe interest rate differentials(…)We maintain our existing bullish call for 1.0892/1.0944 – the 50% retracement of the 2021/2022 fall and broken trend resistance from early 2017, with this then ideally capping to define the top of a broad range.”
EUR/USD continues to trade in positive territory near 1.0650 in the second half of the day on Tuesday. After the data from the US showed that weekly Initial Jobless Claims rose by 9,000 last week, the US Dollar came under modest selling pressure and helped the pair push higher.
GBP/USD advances above 1.2050 amid renewed USD selling
GBP/USD has regained its traction and rose above 1.2050 after having declined toward 1.2000 earlier in the day. The US Dollar Index struggles to find demand amid improving market mood on Thursday and allows the pair to extend its rebound.
Gold rises above $1,810 as US yields edge lower
Gold price has advanced above $1,810 in the early American session on Tuesday. The renewed US Dollar weakness and a 1% decline seen in the benchmark 10-year US Treasury bond yield fuels XAU/USD’s recovery on Thursday.