EUR/USD Forecast: ECB provides unexpected support

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0755

The ECB downwardly revises growth figures but pushes up inflation ones.
European policymakers hinted at a 25 bps rate hike in July and another in September.
EUR/USD has turned bullish in the near term but remains below a critical resistance level.

The EUR/USD pair trades with modest gains in the 1.0760 price zone, volatile in the middle of the European Central Bank monetary policy decision. The central bank has maintained rates on hold, as expected while anticipating a 25 bps hike in July. The pair fell to 1.0687 but quickly recovered from the level, despite policymakers upwardly reviewing inflation figures.

Annual inflation is now seen at 6.8% for this year, then decreasing to 3.5% in 2023 and to 2.1% in 2024. Growth has been downwardly revised to 2.8% in 2022 and to 2.1% for the next two years. Additionally, another rate hike is planned for September, and the scale of the increment would depend on the medium-term inflation outlook.

ECB President Christine Lagarde is giving a speech, which could spur more volatility around the pair, particularly within the Q&A. In the meantime, the US published Initial Jobless Claims for the week ended June 3, which were up to 229K, worse than anticipated.

EUR/USD short-term technical outlook

The EUR/USD pair trades around the 50% retracement of its latest daily slump, at 1.0770, also near the May high at 1.0780. According to the daily chart, the risk is now skewed to the upside. Technical indicators have turned higher within positive levels, reflecting increased buying interest. At the same time, the 20 SMA maintains its bullish slope below the current level, approaching the 38.2% retracement of the aforementioned decline at 1.0665.

The 4-hour chart shows that the bullish momentum picked up, as technical indicators head firmly north within positive levels and at their highest for this week. The 100 SMA keeps advancing below the current level while the pair rallies above a flat 20 SMA. The pair has room to extend its gains once above the 1.0780 region, aiming then for the next Fibonacci resistance at 1.0860.

Support levels: 1.0710 1.0665 1.0620

Resistance levels: 1.0780 1.0815 1.0860

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.