Is the EUR/USD pair preparing for a new battle?

Some analysts explain the short-term lull in the EUR/USD pair by grouping before a new surge. First of all, this concerns the US dollar, in the shadow of which the euro resides.

The US currency started the current year with a rise and is trying to consolidate in an upward trend. It already succeeds in this without huge efforts, contrary to the euro, which is still lying low. However, the US dollar remained inactive, weakly reacting to what was happening. On Tuesday morning, the EUR/USD pair was trading at the level of 1.1341. The pair is now dominated by a bullish mood, which can change anytime. The possible targets for the bulls are 1.1364, 1.1385, and 1.1442.

Currently, the US dollar is moving in the middle of the current range against major world currencies, as markets are waiting for the Fed's decisions on the timing and pace of normalization of monetary policy. The regulator keeps the markets in suspense, continuing the "hawkish" strategy launched at the end of December 2021. Experts are worried about the Fed's excessive enthusiasm, which is ready to use every fund to curb the powerful inflation.

Amid the Federal Reserve's high activity, the smoother actions of the ECB seem unnecessarily slow. Analysts fear that the European regulator will lose time to normalize the economic situation in the region. This development of events will seriously weaken the euro, which somewhat looks neglected right now. Experts consider Europe's sharp rise in gas prices to be an additional negative factor for the euro. The strengthening of this trend contributes to the further decline of the euro and the strengthening of its rival in the EUR/USD pair. After all, the US currency is given a head start in anticipation of a rate hike in March 2022 and an accelerated transition to cut stimulus.


News are provided by InstaForex