- EUR/USD stays calm above 1.0900 to start the new week.
- Markets will pay attention to comments from ECB officials.
- The pair's action is likely to remain subdued in the second half of the day.
EUR/USD fluctuates in a narrow channel above 1.0900 early Monday following last week's impressive upsurge. There won't be any high-tier data releases that could impact the pair's performance, leaving comments from European Central Bank (ECB) officials as the only potential catalyst. In the second half of the day, trading action is likely to remain subdued with the stock and bond markets in the US remaining closed in observance of the Juneteenth holiday.
ECB Chief Economist Philip Lane, Governing Council member Isabelle Schnabel and ECB Vice President Luis de Guindos will be delivering speeches later in the day.
Markets expect the ECB to opt for one more 25 basis points (bps) increase in key rates in July. A confirmation of such a policy step shouldn't come as a surprise. Instead, investors will want to know whether the ECB will need to continue to tighten the policy after July. Although it's unlikely, the Euro could gather strength in case officials voice a willingness to hike rates in September.
On Wednesday and Thursday, FOMC Chairman Jerome Powell will testify on the monetary policy decisions before lawmakers. The Federal Reserve (Fed) released the monetary policy report to Congress late Friday, in which it reiterated that the outlook for the policy rate was subject to a "considerable uncertainty." Markets are pricing in a nearly 75% probability of a 25 bps Fed rate hike next month.
EUR/USD Technical Analysis
EUR/USD returned within the ascending regression channel early Monday. The 1.0900 level (mid-point of the ascending channel) aligns as a strong support for the pair. The Fibonacci 61.8% retracement level of the latest downtrend and the 20-period Simple Moving Average (SMA) also reinforce this level.
If the pair falls below 1.0900 and starts using this level as resistance, it could extend its correction toward 1.0850 (lower-limit of the ascending channel, Fibonacci 50% retracement).
On the upside, 1.0960 (static level, upper-limit of the ascending channel) could be seen as the first resistance ahead of 1.1000 (psychological level) and 1.1050 (beginning point of the latest downtrend).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.