Interested in exploring the Forex landscape? Let’s start with some key players: the EUR/USD, GBP/USD, and USD/NGN. Ever wondered how these currency pairs reflect global economic trends? We’ll take a closer look at the Euro against the US dollar, the British pound against the US dollar, and the US dollar against the Nigerian naira. Ready to uncover the stories behind these symbols and what they mean for traders?
Forex(EUR/USD): Euro Hits $1.0790, 100-Day MA, After 3 Consecutive Gains
The upcoming release of the Federal Reserve’s meeting minutes on Wednesday is crucial for understanding the sentiment of central bankers regarding their recent rate-cutting strategy.
The EUR/USD began the week on a positive note, continuing its three-day upward trend. The Eurozone’s currency saw a modest 0.1% increase, staying below $1.08, a level aligned with the 100-day moving average. A breach above this level would suggest potential further upward movement.
The focus in the FX markets is on the Federal Reserve’s forthcoming updates. Scheduled for Wednesday, the release of the meeting minutes will provide insight into the discussions among policymakers three weeks ago, which prompted a significant market reaction due to remarks made by Fed Chair Jay Powell.
While US traders are on break for Washington’s Birthday, trading activity in the currency markets remains subdued, with lighter volumes and reduced liquidity. Despite the closure of stock markets, FX trading is expected to continue, signaling a time for technical analysis.
Forex(USD/NGN) Nigeria’s naira declined
According to LSEG data, Nigeria’s naira declined further against the US dollar on Monday, reaching a new all-time low of 1,712 in late trading on the official market, nearly aligning with rates in the informal parallel market where it was quoted at 1,710 naira.
In intraday trading on the official market, it hit a low of 1,650 naira per dollar. The ongoing dollar scarcity, leading to record lows for the currency, persists in Africa’s largest economy. Despite this, central bank Governor Olayemi Cardoso has stated that there are signs of improvement in dollar liquidity.
Forex Sterling higher after last week
The pound saw a slight uptick on Monday, following last week’s decline, with investors awaiting fresh direction from upcoming survey data later in the week.
GBP/USD rose by 0.12% to $1.2615 after a 0.25% dip last week. With U.S. markets closed for Presidents’ Day, trading volumes are expected to be subdued.
In contrast, the euro weakened marginally against the pound, with EURGBP at 85.42 pence.
Last week, the euro hit a six-month low against the pound at 84.98 pence following better-than-expected UK wage data, which boosted sterling. However, it rebounded as the pound retreated after lower-than-expected UK inflation figures.
Chris Turner, global head of markets at ING, noted that currency markets are likely to remain relatively calm until central banks begin interest rate cuts later in the year, as volatility often stems from interest rate market movements, which are currently stable.
Investors are anticipating the release of survey-based purchasing managers’ index data on Thursday, providing insight into the UK’s economic health for February.
Market expectations for interest rate cuts by the Bank of England (BoE) have moderated, with projections now around 70 basis points for the year, down from approximately 110 in early February. There’s about a 55% likelihood of the first BoE cut occurring by June.
BoE chief economist Huw Pill suggested that progress on inflation has been modest, indicating that it may take several more months to address persistent inflation components. UK inflation remained steady at 4% in January, defying forecasts for an increase but remaining above the BoE’s 2% target.
EUR/USD: Despite challenges, the euro maintains resilience against the US dollar, reflecting Eurozone dynamics and monetary policy shifts.
GBP/USD: With nuanced fluctuations tied to Bank of England rate expectations, the British pound navigates economic data releases and market sentiment.
USD/NGN: Amidst dollar shortages and economic challenges, the Nigerian naira’s journey underscores the impact of local and global factors on emerging market currencies.
