Demand Imbalance Arbitrage

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Forecast Future Price Action

US Dollar Strengthens as Eurozone Data Stays Flat


The US Dollar (USD) has been strengthening in the past few days after Treasury yields soared.[0] Supported by upbeat macroeconomic data releases and hawkish comments from Fed officials, the USD Index (USD) reached its highest level since early January above 104.00 on Friday.[0]

In the Eurozone, the European Union Commission raised its 2023 GDP forecast to 0.9% from a prior estimate of 0.3% and cut its 2023 inflation forecast to 5.6% from a previous forecast of 6.1%.[1] This led the Euro to stay at the same level as against a marginally weaker US dollar with EUR/USD changing hands around 1.0760.[2]

In the US, retail sales rebounded sharply in January after two straight monthly declines, rising 3.0% on the month compared with December’s 1.1% fall, data showed Wednesday.[3] The greenback surged on the back of the data release and clung to most of those gains on Thursday, with the US Dollar Index (USD) outperforming its rivals.[4]

Meanwhile, for the central bank to slow tightening pace from current 50bps per meeting, ECB Governing Council member Centeno said, “we really need to see inflation converging to 2% in the medium term”.[1]

The market will pay close attention to central bank speak ahead of the weekend.[0] In the absence of high-impact data releases, EUR/USD should be moved almost solely by the US inflation report today.[5] The preliminary (i.e. second) release of eurozone growth numbers looks unlikely to impact markets and there is only one scheduled European Central Bank speaker (Gabriel Makhlouf).[5]

Data is expected to continue to be the main factor affecting the dollar and the world’s risk climate, as the intensity of the US economic downturn is still a vital determinant of interest rate expectations, particularly concerning the timing, magnitude, and speed of the Federal Reserve’s easing over the next few years.[3]

From a technical standpoint, the Euro may remain vulnerable to the US dollar.[6] EUR/USD moved downward last week, breaking through a Bearish Rising Wedge chart formation.[6] Investing in foreign currency or other off-exchange products using leverage can be quite risky and may not be suitable for all types of investors.[2] It is recommended that you assess if trading is suitable for you based on your individual situation before making any decisions.[2] Engaging in Forex trading carries a[2] Deposits can be exceeded by losses.[2]

0. “Forex Today: Hawkish Fed bets fuel US Dollar rally ahead of the weekend” FXStreet, 17 Feb. 2023,

1. “Dollar Fades On Lower T-Note Yields And Stronger Stocks” Barchart, 13 Feb. 2023,

2. “Euro Update: EUR/USD Holds Early Gains After EU GDP Release, US CPI Looms” DailyFX, 14 Feb. 2023,

3. “Dollar retreats from six-week high; data deluge eyed By”, 16 Feb. 2023,

4. “U.S. dollar advances after producer prices, jobless claims data” CNBC, 16 Feb. 2023,

5. “FX Daily: Asymmetrical upside risks for the dollar today” ING Think, 14 Feb. 2023,

6. “US dollar price action setups: EUR, AUD, JPY, GBP” https ://, 14 Feb. 2023,–eur–aud–jpy–gbp-230214

Forecast Future Price Action
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