EURUSD Gets Ready for a Data-Rich Week with the ECB and Fed in the Spotlight. A worsening risk perception provides extra support for the USD.
EURUSD Key Points
Money markets need more assurance between a 0.25% and 0.50% increase. Therefore, the ECB is relying on inflation statistics to guide its rate rise decision.
A worsening risk sentiment offers extra support for the Greenback.
On both the weekly and daily intervals, technical analysis suggests the negative for the euro
BEARISH EURO FUNDAMENTAL PREDICTIONS
The euro is in the red going into the central bank-focused week, but that might change. Once the ECB rate decision approaches (refer to the economic schedule below). Markets will use important metrics, such as loan statistics and eurozone core inflation, to assess the status of the area. Due to wage hikes balancing increased prices so far. More inflation has stayed high and is expected to do so in the future. The problem the ECB is currently dealing with is that price increases have moved from supply-side causes (such as abating oil costs) to demand-side factors.
Economic Activity Schedule for the coming week
Current money market pricing indicates that there is a 78% chance that the ECB will increase rates by 25 basis points. As the present situation is filled with unknowns Due to increased war in Ukraine along with warnings over a recent banking turmoil. This is probably a broad option so that the ECB can re-evaluate economic variables prior to the June meeting.
Safe Heaven Favors the US Dollar at Present
From the standpoint of the US, global risk sensitivity may contribute to the greenback’s safe-haven quality. If it persists as a result of the factors listed above. Additionally, according to inflation and employment data, the US economy is strong. The implied Fed funds futures show, as they have for some time, that this could be the final rate increase from the Fed. The Fed may feel compelled to raise interest rates if inflation and job growth remain to be robust. Leaving the euro vulnerable to additional declines.
Technical Perspective
A lengthy higher wave appears to be appearing on the weekly EURUSD graph. If the weekly candle ends in this way. The duo may experience further negative in the near future. Similar to a tombstone doji and a shooting star. The technical indicators support euro bears, especially when paired with an RSI that is getting close to the overbought zone.
Indication Bearish Shift
Reliability Low
Description: The gap-up happens during an upswing. It advances to a fresh high, fails, and ends close to its under: This is a bearish shift in trend. A gap under the shooting star’s center on the following trading candle could suggest a trend reversion. Unlike the evening star, it is not a significant reversal indication.
The actual form should ideally look past the old body.
Daily EURUSD pricing activity depicts the rising channel’s continuance since mid-March 2023. The weeklong indications may be backed up by a break and verification closure below the channel support. That would also highlight the psychological level of 1.0900.
