On Friday (January 31st) during the European trading session, the EUR/USD fell for the fourth consecutive trading day. The fluctuations in these two days are mainly influenced by the meetings of the two major central banks and several macroeconomic data. The policy decisions of the Federal Reserve and the European Central Bank are in line with market expectations, and there has been no significant change in the rhetoric of Powell and Lagarde, both of whom have avoided making clear statements about their future policy intentions.

The economic growth in the eurozone still appears to be relatively slow, and Germany and France, as the two largest economies in the EU, still face high risks of political instability, which leads the market to remain cautious about the prospects of the euro. Although the performance of the euro has improved, analysts believe that there is currently a lack of sufficient catalyst to drive a significant rise in the euro, especially as it moves towards the high point of 1.08-1.10.

In terms of macro data, the Personal Consumption Expenditure (PCE) index in the United States will be the focus, which is the inflation indicator that the Federal Reserve is most concerned about and has important significance for predicting future inflationary pressures. Analysts believe that without obvious surprises or market catalysts, the euro may face further downward pressure, especially in the absence of the important support level of 1.05.

The slow economic growth in the eurozone and political instability in the two major economies have led to a cautious market view of the euro. However, analysts believe that the euro still shows some rebound ability, but lacks strong momentum to break through to higher levels; Relatively speaking, the strength of the US dollar still dominates, and the continued existence of interest rate differentials provides significant support for the US dollar. For the euro, perhaps it is not yet the time for a significant upward trend, and the market may still remain volatile and organized.

Technical analyst interpretation:

From a technical perspective, the current trend of the euro still shows a certain sideways consolidation state, and has not yet broken through the key level of 1.05. The current market sentiment is cautious and lacks sufficient catalyst to drive a strong rebound of the euro. Therefore, the technical aspect of the euro is still subject to certain suppression.

In the short term, the euro/dollar may continue to fluctuate and consolidate around 1.04. However, the technical level of 1.05 remains the focus of the game between long and short sides. If the euro can recover from this level, it may usher in a short-term rebound. However, in order to break through 1.05 and move towards 1.08 or even higher levels, stronger economic data or signals are still needed as support.

Considering that the current interest rate differential still leans towards the US dollar and the Federal Reserve's policy has not changed significantly, the US dollar may continue to remain strong in the short term, putting downward pressure on the euro. At present, the exchange rate has fallen below 1.04, which means that the euro will test lower support levels.

On the other hand, if the euro/dollar can remain stable around 1.04, it may gradually bottom out and wait for stronger economic data or policy signals to drive an upward trend. 1.08-1.10 is the upward target area for EUR/USD, but considering the current economic situation, the possibility of breaking through this level in the short term is relatively low.