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【XM Market Review】--EUR/USD Analysis: Stability Awaits New Catalysts
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Hello everyone, today XM Forex will bring you "【XM Market Review】--EUR/USD Analysis: Stability Awaits New Catalysts". I hope it will be helpful to you! The original content is as follows:
- Bulls are trying to maintain the EUR/USD exchange rate stable around and above the 1.0500 resistance, aided by hopes for a quick resolution to the German coalition talks and expectations of further weakness in US stocks.
- According to reliable trading xmaccount.company platforms, the euro may outperform the rest of the major currencies following the end of the German elections.
- Obviously, that confirms some concerns before the vote that the right-wing Alternative for Germany party would outperform expectations and xmaccount.complicate the formation of a centrist government.
The New German Policy Will Determine the Fate of the Euro
In this regard, the Alternative for Germany party recorded a stunning result, but it is in line with opinion polls before the vote. This relief led to the euro rising against the US dollar to 1.0527 at the start of this week's trading, but it has since retreated from these gains to reach 1.0483. xmaccount.commenting on the performance, the currency analysis team at MUFG Limited believes: "The fact that the German election result did not yield a surprising superior performance of the right-wing Alternative for Germany party was met with relief in the financial markets, and the euro is the best performing currency among the G10 currencies recently."
However, the euro's rise after the elections is relatively tepid and suggests that the result is not necessarily a game-changer for the single European currency. The markets are witnessing weeks of negotiations between the CDU/CSU led by Friedrich Merz and the Social Democratic Party, which will eventually lead to a government with a slight majority. The center-right CDU/CSU won 28.5% of the vote. The far-right Alternative for Germany party achieved a historic second place, winning 20.8%. The ruling Social Democratic Party (SPD), led by Chancellor Olaf Scholz, saw its worst performance since World War II, winning only 16.4%. The Greens won 11.6%, while the Left Party (Die Linke) saw a resurgence with 8.8%.
A coalition between the CDU and SPD could therefore be relatively straightforward, which financial markets will welcome, as the government will not need xmaccount.complicated third-party support. the analysts added, “The euro has advanced partly on the hope of a relatively quick negotiation period to form a German government,”.
Investors will be watching to see if the new German government changes the debt brake rule, which restricts German spending and government investment. At the moment, easing the rule is seen as supportive for the euro.
The future of US tariffs
Investors have discounted the prospects of damaging tariffs under US President Donald Trump and are starting to see signs that US economic performance is faltering, opening the door to further interest rate cuts at the Federal Reserve. Furthermore, the risks of rising unemployment and increased economic uncertainty related to Elon Musk’s DOGE program are also emerging as headwinds for the US dollar to watch.
Musk’s “move fast and break things” mantra supports DOGE’s approach, which is a source of uncertainty for US federal government employees and could seriously jeopardize the smooth running of US institutions. DOGE may be successful, but in the short term, it poses risks that could weigh on the US dollar. On Saturday, DOGE sent an email to federal employees asking what they accomplished last week and saying that failure to respond would be considered a resignation. Analysts at Pantheon Macroeconomics believe that the cost-cutting drive should start to show in the labour market numbers this week. They are watching the release of weekly jobless claims, due out next Thursday, for signs of a rise in thhttps://xmaccount.comose filing for unemployment benefits. If the data surprises, we could see a weaker US dollar.
For their part, Pantheon expects the EUR/USD pair to target the 1.05 level by the start of the second quarter of the year. The analysts also expect the weak performance of US stock markets to continue in the xmaccount.coming days, which has been a drag on the dollar as equity flows begin to favour stocks outside the US.
Trading Tips:
Dear follower of TradersUp, we advise selling the euro against the US dollar from every upward level, but without risk and monitoring the factors affecting the performance of the currency pair to get the best trading opportunities.
Decline in European Stock Indices
During yesterday's session and through stock trading xmaccount.company platforms, European stock markets closed lower as the market digested the results of the German elections and continued to adjust to uncertain expectations for government spending in Europe and trade flows with the United States. According to trading, the Stoxx 50 index lost 0.4% to close at 5452 and the Stoxx 600 index fell by 0.1% to 553. The CDU/CSU bloc received 28.6% of the votes, in line with expectations, but will need to form a coalition to gain a parliamentary majority. Negotiations could be lengthy and the far-right Alternative for Germany party and the Left Party jointly hold a third of the seats, which is enough to block key legislation in the new parliament, especially the debt brake that would allow increased public spending.
According to stock trading xmaccount.company, Prosus shares fell by 9% after the Dutch technology investor said it would acquire JustEatTakeaway.com in a €4.1 billion deal. Schneider shares lost 7%, while shares of giant luxury xmaccount.companies closed sharply lower. On the other hand, shares of banks, insurance xmaccount.companies and car manufacturers achieved gains.
EUR/USD Technical Analysis Today:
Dear reader, according to recent trading, the EUR/USD currency pair is heading towards an upward movement in the short term and is trading above the nine-day exponential moving average (EMA), which calls for gains in the first part of the week. However, the rise collides with the 100-day exponential moving average at 1.0534, and this may provide some resistance in the near term and limit any gains after the elections. At the moment, weakness will be limited to levels above 1.04, and a final move above 1.05 is preferred on a multi-day time frame. The gains of the EUR/USD pair are largely a function of US dollar weakness, and although Germany offers some benefit, the direction of the exchange rate ultimately depends on whether the dollar will weaken further.
The above content is all about "【XM Market Review】--EUR/USD Analysis: Stability Awaits New Catalysts", which is carefully xmaccount.compiled and edited by XM Forex editor. I hope it will be helpful for your trading! Thank you for your support!
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