HomeForex MarketEuro unable to Capitalize on Yesterday’s ECB, EUR/USD Exams 1.06

Euro unable to Capitalize on Yesterday’s ECB, EUR/USD Exams 1.06

EUR/USD TALKING POINTS

  • ECB recap – GDP, inflation & charges.
  • U.S. CPI in focus later in the present day.
  • IG consumer sentiment: Bearish.

EURO FUNDAMENTAL BACKDROP

Yesterday’s European Central Financial institution (ECB) price resolution and press convention (though extra hawkish) despatched the euro tumbling post-announcement. Main as much as the announcement, markets have been pricing in a extra aggressive stance however the ECB quelled these projections by opening up the potential for a 50bps price hike in September and never July as many anticipated. As well as, progress forecasts have been revised decrease thus weighing on euro upside regardless of the potential for the aforementioned 50bps bounce. GDP progress revisions learn as follows:

  • 2.8% in 2022, 2.1% in 2023, and a pair of.1% in 2024

Whereas the opposite is true for inflation (revised larger), the speak of the city is stagflation (excessive inflation coupled with declining progress) as soon as extra. Brushed of by many final yr, the prospect is turning into ever extra probably which may have critical draw back results for the euro ought to it come to fruition.

We will see by way of the desk under that cash markets have cemented their expectations for 75bps by September which features a 50bps hike for the month subsequently any dovish disappointment (i.e. two 25bps hikes) may significantly push EUR/USD decrease.

ECB INTEREST RATE PROBABILITIES

Supply: Refinitiv

EUR/USD ECONOMIC CALENDAR

The financial calendar in the present day is dominated by U.S. CPI information for Might with a lot emphasis on the headline determine. Historically, core inflation is the popular measure for the Federal reserve however it appears markets and media favor the headline determine o latest occasions. The print is forecasted to come back in at 8.3% which is identical as April’s print however something in line or larger may undoubtedly push the euro under 1.0600 in the present day because the U.S. greenback finds help.

eurusd economic calendar

Supply: DailyFX financial calendar

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

eurusd daily chart

Chart ready by Warren Venketas, IG

Trendline resistance (black) on the each day EUR/USD chart above has held as soon as once more emphasizing its significance since early February 2022. Worth motion is skewed to the draw back and I’d not be stunned if we see bears break under 1.0600 in direction of the 1.0500 psychological zone.

Resistance ranges:

  • 1.0800
  • Trendline resistance (black)
  • 50-day EMA (blue)
  • 20-day EMA (purple)

Help ranges:

IG CLIENT SENTIMENT DATA: BEARISH

IGCS reveals retail merchants are presently LONG on EUR/USD, with 64% of merchants presently holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment leading to a short-term draw back bias.

Contact and comply with Warren on Twitter: @WVenketas

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