Euro boosted by strong foreign inflows – NOMURA

💡 DMK Insight

The euro area’s improving balance of payments is a game changer for EUR traders right now. With overseas inflows increasing, it signals growing confidence in the euro, which could lead to upward pressure on EUR/USD. This trend is particularly relevant as traders look for signs of economic stability in the eurozone, especially with the ECB’s interest rate decisions looming. A gradual slowdown in overseas investments by residents suggests that domestic sentiment might be shifting, potentially impacting liquidity and market dynamics. If this trend continues, we could see EUR testing key resistance levels, making it crucial for traders to monitor the 1.10 mark in EUR/USD as a pivotal point. A break above could trigger further bullish momentum, while a failure to hold might lead to a retracement. But here’s the flip side: if global economic conditions worsen, even positive data could be overshadowed, leading to volatility. Keep an eye on upcoming economic indicators and geopolitical developments that could sway investor sentiment. The next few weeks will be critical for gauging the euro’s strength and positioning accordingly.