EURO (EUR/USD, EUR/GBP, EUR/JPY) WEEKLY FORECAST: BEARISH

• ECB minutes confirmed that central bankers are in no rush to cut interest rates
• EUR/USD reveals short-term resistance amid longer-term advance
• EUR/GBP back at key support zone, providing the next big test
• EUR/JPY bull run showing signs of fatigue ahead of crucial Japanese CPI print
• The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

CENTRAL BANKERS IN NO RUSH TO CUT RATES

The theme among global central bankers this week centered around delaying the start date of interest rate cuts. The slightly hawkish FOMC minutes kicked things off this week followed closely by comments from prominent Fed officials in favour of delaying the start date of interest rate cuts.

However, Europe is not in the enviable position the US finds itself in. The world’s largest economy has outperformed growth expectations, maintains a tight labour market, and the consumer appears healthy on the surface at least. Europe, on the other hand, has narrowly avoided a technical recession on multiple occasions, saved by the narrowest of margins as quarterly GDP growth oscillates around zero.

However, markets now price in a similar trajectory of future interest rate cuts for the two very different economies, projecting a little more than three 25 basis point cuts this year with futures markets pricing 85bps for the Fed and 88bps for the ECB in December.

Bundesbank head Joachim Nagel referred to the fact that the ECB will only get key price data in Q2, anchoring expectations of a possible cut around the mid-year mark. Earlier on Friday, The ECB’s Robert Holzmann reiterated that the ECB typically follows on from the Fed when it comes to the timing of rate adjustments, which further tapered rate cut bets. The ECB minutes of the January meeting revealed that the risk of cutting too soon still outweighed the risk cutting interest rates too late and subjecting the economy to unnecessary stress.

The euro is the currency pair adopted by European countries within the Euro Area and represents the second most liquid currency in the world. EUR/USD REVEALS SHORT-TERM RESISTANCE AMID LONGER-TERM ADVANCE

The weekly EUR/USD chart shows a notable rejection of the prior weekly low of 1.0724 – a level that has supported prices multiples times in the past. The pair is also on track to post a weekly recovery after bearish price action showed signs of slowing down in the prior two weeks with very thin candle bodies.