The US dollar benefited from safe-haven flows amid risk-off sentiment. Cash flows into the dollar stem from escalating geopolitical tensions at the border of Russia and Ukraine and rates hike speculation.
Traders are increasingly convinced about the possibility of a Federal Reserve 50-bps rate hike next month. There was speculation about a rare inter-meeting Fed move before the Fed’s Mar. 15-16 meeting, but this move is very unlikely.
With only the January data at hand showing broadening price pressures and amid lingering geopolitical unrest, the Fed will favor waiting and taking in further data before making such an aggressive move.
St. Louis Fed President James Bullard, who favors three hikes by July, said the Fed isn’t “in that mode” of emergency rate hikes, noting that there is little need to surprise markets now given the tightening they are pricing in already.
Nevertheless, traders should be aware of a potential escalation around the Ukraine border that can send the markets into a tailspin.
EUR/USD – Poised for a Slide Towards 1.1250?
After the resistance around 1.1490 proved its hold, the EUR/USD pair seems to be primed for a move south toward the support area between 1.1270 and 1.12. We will maintain a neutral stance as long as the euro remains between 1.1450 and 1.12, but in case of a renewed break below 1.1180, our next target will be at 1.11.
We are currently short at 1.1335, SL has moved to breakeven, TP is at 1.1295.
Meanwhile, GBP/USD was recently captured between 1.3650 and 1.35. Bulls will now wait for a break above 1.3670, while bears will wait for a slide below 1.3490 to sell sterling toward 1.34.
We are currently short at 1.3525, SL has moved to 1.3535, TP is at 1.3485.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumptions of MaiMarFX traders. They are not meant to solicit or recommend buying or selling a specific financial instrument.
