The dynamics described above saw the EUR/USD currency pair retracing strongly from its multi-year high at the level over 1.1400. By the end of the week, it had managed to cling on around 1.1360. Recent disappointing results from the US Producer Prices Index within the last few weeks have sent the market into turmoil on multiple occasions. Consequently, the US Dollar is reeling, entirely changing market dynamics and trader psychology.
For many traders, the EUR/USD pair is the go-to pick, and in recent times, it has been receiving quite the buzz, most notably for its rally. After its rise above the important 1.1400 resistance level, the currency pair started to show a corrective move. By the end of the trading week, it had mostly settled back down to 1.1360. This recent pullback serves to remind that despite challengers, the U.S. dollar remains a strong seat at the foreign exchange market’s table.
This spike is thanks to a combination of several positive economic indicators and booming market conditions. The worse than expected US Producer Prices Index numbers have added to the bearish US Dollar outlook. This change favours the Euro, providing potential for the Euro to gain ground against it. The Producer Prices Index dropped well short of expectations. This decline indicates a much bleaker picture for the U.S. economy in the near term.
Please remember that trading in financial markets involves substantial risk. This is particularly the case for risk management instruments such as Contracts for Difference (CFDs). Statistics show that generally, around 81.4% of retail investor accounts lose money when trading CFDs with these providers. Traders need to be careful when trading active currency pairs such as EUR/USD. They need to make sure they have a good market making strategy defined and implemented.
This is not investment advice, just the author’s unvarnished opinion on the current market machinations. Then, they make sense of the trends we’ve seen during this time. No matter what, readers need to understand that neither the author nor FXStreet is a registered investment advisor. This should not be considered as investment advice. It further does not exhibit the views or carry out the opinions of FXStreet or its associated advertisers.