Forex Analysis & Reviews: 14.02.2025 - The Euro is Tired of War

InstaForex Loprais Team - Official participant of the Dakar rally

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

14.02.2025 12:45 AM

The Euro is Tired of War

If the Federal Reserve can afford to slow down monetary expansion, why shouldn't the European Central Bank do the same? Statements from Bundesbank President Joachim Nagel suggest that, as the ECB approaches a neutral level, it should proceed with caution. Additionally, rumors of negotiations to end the armed conflict in Ukraine have helped the EUR/USD pair withstand strong U.S. inflation data and launch a counteroffensive. However, on its first attempt, the pair failed to make significant upward progress.

ECB Rate Dynamics

When hostilities broke out in Eastern Europe in February 2022, the euro was trading above $1.14, with expectations of continuing its rally due to recovering domestic demand after the pandemic. However, disruptions in oil and gas supplies from Russia triggered an energy crisis, prompting the EU to increase military spending while cutting back on other budgetary allocations. This led to a capital flight from Europe, causing the EUR/USD exchange rate to fall below parity by autumn 2022.

If a peace agreement is reached between Moscow and Kyiv, we could see a decline in defense expenditures, a drop in energy prices, and reduced geopolitical risks that would restore investor interest in the Eurozone. Recently, a phone conversation between the U.S. and Russian presidents sparked a rally in the euro and other European currencies.

Although this may be just the beginning of a peace negotiation process, the fact that initial steps have been taken is having a positive impact on risk assets and contributing to a weakening of the U.S. dollar, which is traditionally viewed as a safe-haven currency.

However, uncertainty remains. The positions of Moscow and Kyiv are still far apart, and Donald Trump's unpredictability means he could potentially derail the process at any moment. As a result, the upward movement of EUR/USD is unlikely to be linear. Many obstacles still lie ahead for the bulls, with significant challenges including U.S. protectionist policies and forecasts from the futures market that predict only one Fed rate cut in 2025. Notably, the December FOMC projections included expectations for two acts of monetary easing.

Market Rate Forecasts for the Fed

There is still considerable uncertainty surrounding Donald Trump's tariff policies. If the U.S. president chooses to implement reciprocal tariffs instead of universal ones, trade partners may reduce entry barriers for American goods. This could potentially accelerate international trade rather than slowing it down, benefiting the global economy and pro-cyclical currencies like the euro. Given the various possible scenarios, the EUR/USD pair is likely to remain in a medium-term consolidation until more clarity emerges.

From a technical perspective, the daily EUR/USD chart indicates that bullish traders attempted to activate a minor 1-2-3 pattern to extend the correction. The first attempt to break resistance at 1.0435 was unsuccessful; however, a successful second attempt could present long opportunities. Conversely, if the price drops below the pivot level of 1.0355, it would signal a return to short positions.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.