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EURUSD hovers in side trend near 1.1330

The euro rose 0.17% to 1.1325 on Monday, January 24. During the European session, price action dipped to 1.1291. Risk-sensitive assets came under pressure amid geopolitical risks. Fear of military conflict in Ukraine pummeled stocks across the globe, propping up the US dollar.

NATO countries have deployed additional forces to Eastern Europe due to the Ukraine crisis. In response, Russia launched a major exercise of the Russian Navy in the Baltic Sea. The US State Department said on Sunday it was ordering family members of diplomats to leave Ukraine, while the Pentagon announced that it has put 8,500 troops on high alert.

A reversal took place during the North American session against the backdrop of a sharp rise in the EURGBP pair. Then the pair surged to 1.1335 due to the rebound of US stock indices. The S&P 500 bounced back after sinking 4.5%. Retail, energy and industrial companies locked in gains. There was no news behind the growth. Buyers returned to the market after a deep correction.

Today’s macro agenda (GMT+3)

  • 12:00 Germany: IFO business climate, current conditions, and expectations (January)
  • 14:00 UK: CBI industrial trends orders (January)
  • 17:00 US: Fannie Mae and Freddie Mac house price index (November)
  • 18:00 US: Conference Board consumer confidence (January)

Current outlook

By the time of writing, major currencies were trading in the red, except for the yen. The euro was  at 1.13005 (-0.18%). S&P 500 futures fell 1.07%. The index is correcting lower after yesterday's growth.

Market participants are now focusing on the FOMC  meeting. The central bank will announce is rate policy decision at 19 GMT on Wednesday. Tensions are still running high on the US stock market. If the benchmarks continue to correct, we can expect risk appetite to increase for a while. Support lies at 1.1290. If buyers fail to hold this level, the door will be open to the 1.1220-1.1235 range.

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