Jakarta, GIC Trade – The euro currency traded between gains and losses amid mixed sentiment as market participants digested the results of the FOMC and ECB meetings in the previous week.
 
In the domestic report, industrial production in Italy increased by 1.6% in December and 0.1% from a year earlier. While recession fears now appear to have eased, those at the same time remain important drivers that maintain the single currency recovery as well as the hawkish narrative from the ECB.
 
Meanwhile, price action around European currencies will continue to follow the dynamics of the dollar, as well as the ECB's potential next move after the central bank delivered a 50 bps rate hike at its meeting last week.
 
This mixed sentiment responds to the continuation of the ECB's hiking cycle amid reduced bets for a recession in the region and still-high inflation. The impact of the Russia-Ukraine war on the growth outlook and inflation outlook in the region, has made the euro movement lose its direction.
 
On the other hand, economists at ING said "Although the improving risk environment helped the Euro's pro-cycle, below-consensus German inflation may make investors more cautious about the euro's rally. In this case, the ability of European Central Bank speakers to lift the euro appears to be diminished."
 
Fundamentally, the European Central Bank (ECB)'s determination to fight inflation through interest rate monetary policy is the support for the euro currency to recover. Then how technically, see the following analysis:
 
Technical Analysis

 
EUR/USD on the 1-hour period is in a downtrend pattern, testing the support area at 1.06700. The potential decline of the euro is also seen from the MA50 line which crosses the MA100 line. However, the bias will turn bullish if the 1.07530 resistance area can be crossed to the second daily resistance or R2 at 1.08180.
 
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