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Euro Forex Market Gains on US Positivity

Updated on
  • Dollar Weakness Provides Euro Opportunity
  • Smaller Rate Hikes Expected to Continue
  • Stocks Break Losing Run

The Euro forex market took an opportunity to gain ground against the US Dollar on Thursday. This bullish momentum may carry into Friday, though there is little data to suggest that is the case. The Dollar has continued to slip lower, and this is more of a determining factor. The US meanwhile is expected to continue toward a recession as there seems to be no end in sight to rate hikes, albeit smaller than before. Stocks on Wall Street also managed to break a multiple-day losing run on Friday. 

Dollar Dip is Chance for Euro Traders

Over the recent period, the EUR/USD has continued to show slow and steady progress. This is in the wake of what was a time of unprecedented US Dollar strength. Those forex trading the Euro though are now seeing some light at the end of the tunnel. The common currency has managed to capitalize more on Dollar weakness this week rather than any of its own particular strength. 

There is little in the way of economic data on the docket for Friday either in the US or Europe. This would suggest there should not be too much movement in the currency pair which sits around 1.054 at the time of writing. The trade in US equities helped the Euro on Thursday, and this may continue to be the determining factor on Friday. 

US Recession Fears Persist

Though the current market mood seems to be moving toward a more positive sentiment, there still remains a persistent feeling among economists and market watchers, that the US is heading for a recession. The trade in equities at the moment, and movement at forex brokers, would not suggest that traders are imminently concerned, but the wider market is considering the possibility. 

Rate hikes from the Federal Reserve look set to continue for the time being at least. These are expected to be smaller in nature, possibly 50 basis points at the December meeting, to keep the Fed on track to hit inflation targets. A Reuters poll of economists showed that the majority are expecting the US to enter at least a short recession in the coming year.

Wall Street Picks Up

Trading on Wall Street turned in a more positive direction on Thursday following another unpredictable week. The S&P 500 managed to break its longest losing run since October with a gain of 0.75% to snap the five-day streak. There were similar gains from the Dow which added close to 200 points, while the Nasdaq was the strongest performer of the day. The tech-heavy index added more than 1%.

Despite these gains, barring a very strong session on Friday which seems unlikely, all three major indices look set to end the week lower than they started. The Dow is down more than 1.5%, while the S&P 500 and Nasdaq have both dropped more than 2.5% on the week.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.