EUR/USD TALKING POINTS
- ECB tightening stays supported.
- ECB and Fed speeches.
- U.S. Manufacturing PMI in focus.
EURO FUNDAMENTAL BACKDROP
The euro has loved some a lot wanted respite since mid-Could after prolonged lengthy positioning on the U.S. greenback pale. Yesterday’s oil embargo on Russia has now heightened fears of additional downward progress revision inside the euro zone regardless of inflation knowledge exhibiting no indicators of aid. This has prompted cash markets to cost in additional fee hikes (see desk under) right through to 2023 which can be unlikely because the financial outlook for the area stays skewed to the draw back.
ECB INTEREST RATE PROBABILITIES
A optimistic begin for the EU by way of financial knowledge this morning started with its Could PMI launch of 54.6 which marginally exceeded expectations, sustaining an general expansionary stance. Unemployment for April remained low printing in step with the 6.8% forecast. Wanting forward the ECB’s President Christine Lagarde is scheduled to talk (see calendar under) whereas markets await the a lot anticipated ISM Manufacturing PMI determine which has been on the decline of latest.
Supply: DailyFX financial calendar
EUR/USD DAILY CHART
Chart ready by Warren Venketas, IG
EUR/USD worth motion appears to be testing the medium-term downtrend (black) which coincides with the 1.0800 psychological stage in addition to the RSI’s 64 stage (inexperienced) which has but to be breached in 2022.
With fundamentals favoring a possible EU progress decline (whatever the present hawkish strain), I believe that the U.S. financial system (and due to this fact the greenback) stays the popular forex in my opinion. I will probably be searching for subsequent assist targets until we see a day by day candle shut above the 1.0800.
- 100-day EMA (yellow)
- 1.0800/trendline resistance (black)
- 50-day EMA (blue)
- 20-day EMA (purple)
IG CLIENT SENTIMENT DATA: BULLISH
IGCS reveals retail merchants are presently LONG on EUR/USD, with 57% of merchants presently holding lengthy positions (as of this writing). At DailyFX we usually take a contrarian view to crowd sentiment nevertheless, latest modifications in lengthy and brief positioning lead to an upside bias.
Contact and comply with Warren on Twitter: @WVenketas