HomeForex MarketEUR/USD Gearing Up for ECB Charge Choice

EUR/USD Gearing Up for ECB Charge Choice

EUR/USD TALKING POINTS

  • ECB charge resolution.
  • Key eurozone and U.S. financial information in focus.

EURO FUNDAMENTAL BACKDROP

The euro opened stronger on Monday regardless of rising tensions between Russia and Ukraine after the Asian session fed off the chance on temper post-Chinese language PMI. Though the financial system stays in a contractionary state, each composite and providers improved on the earlier print.

Euro merchants will probably be targeted on the ECB’s charge announcement later this week with GDP numbers serving as a precursor to eurozone power. Cash markets are pricing in roughly 133bps for 2022 with the upcoming charge resolution anticipated to be left on maintain. The query round rising inflation will probably be introduced up within the press convention ought to charges stay the identical with speak round a doable 50bps hike in July. Even when there’s a hawkish shock, the impact on the euro could also be minimal with present 133bps priced in. Something remotely dovish alternatively ought to result in way more important strikes to the draw back.

ECB INTEREST RATE PROBABILITIES

Supply: Refinitiv

From the greenback perspective, the focus will shift to U.S. CPI to shut off the week. One other undershoot will reinforce the narrative that the financial system has reached its inflationary peak and add to dovish stress.

EUR/USD ECONOMIC CALENDAR

eurusd calendar

Supply: DailyFX financial calendar

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

eurusd daily chart

Chart ready by Warren Venketas, IG

EUR/USD worth motion has bulls testing the downward sloping trendline (black) in the direction of the psychological 1.0800 resistance zone. We may see a push decrease main as much as the important thing eurozone financial information bulletins later this week whereas the greenback appears to capitalize off the overextended euro positioning.

Resistance ranges:

  • 100-day EMA (yellow)
  • 1.0800/trendline resistance (black)

Assist ranges:

  • 50-day EMA (blue)
  • 20-day EMA (purple)
  • 1.0600

IG CLIENT SENTIMENT DATA: MIXED

IGCS exhibits retail merchants are presently LONG on EUR/USD, with 59% of merchants presently holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment nonetheless, current adjustments in lengthy and brief positioning lead to a blended disposition.

Contact and comply with Warren on Twitter: @WVenketas

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