EUR/USD TALKING POINTS
- ECB rate choice.
- Key eurozone and U.S. financial knowledge 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 danger on temper post-Chinese language PMI. Though the economic system stays in a contractionary state, each composite and providers improved on the earlier print.
Euro merchants will likely be centered on the ECB’s fee announcement later this week with GDP numbers serving as a precursor to eurozone energy. Cash markets are pricing in roughly 133bps for 2022 with the upcoming fee choice anticipated to be left on maintain. The query round rising inflation will possible be introduced up within the press convention ought to charges stay the identical with speak round a attainable 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 far more important strikes to the draw back.
ECB INTEREST RATE PROBABILITIES
From the dollar perspective, the concentration is going to shift to U.S. CPI to shut off the week. One other undershoot will reinforce the narrative that the economic system has reached its inflationary peak and add to dovish stress.
EUR/USD ECONOMIC CALENDAR
Supply: DailyFX economic calendar
EUR/USD DAILY CHART
Chart ready by Warren Venketas, IG
EUR/USD price action 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 knowledge bulletins later this week whereas the greenback appears to capitalize off the overextended euro positioning.
- 100-day EMA (yellow)
- 1.0800/trendline resistance (black)
IG CLIENT SENTIMENT DATA: MIXED
IGCS exhibits retail merchants are at the moment LONG on EUR/USD, with 59% of merchants at the moment holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment nevertheless, latest modifications in lengthy and quick positioning end in a blended disposition.
Contact and comply with Warren on Twitter: @WVenketas