The single currency has maintained its unpredictable performance this week, motivating. EURUSD to trade with little gains around the 1.0700 range on Thursday.
EURUSD is expected to consolidate further in the short term.
In the face of a broad-based consolidative sentiment in global markets. The EURUSD builds to Wednesday’s tiny increase and attempts to recapture the territory above 1.0700. On a more sustained basis.
The lack of major drivers for the pair’s price action continues to sustain the existing directionless pattern. However a more cautious trade is likely to emerge in light of the release of key US inflation numbers. And the FOMC event, both of which are scheduled for next week.
There are no modifications to the quarter-point betting around the ECB. Next week’s bank meeting will see a rate hike.
The lone planned release on the domestic calendar will be another revision of the EMU Q1 GDP data. While weekly Initial Claims and Wholesale Inventories will command all attention across the Atlantic.
What to watch for in the EURUSD
The EURUSD is flirting with the critical 1.0700 region amid a general lack of clarity in global markets.
Meanwhile, the pair’s price movement is expected to closely mimic that of the US Dollar. And will be influenced by any variations in approach between the Fed and the ECB in terms of interest rate adjustment plans.
Moving forward, aggressive ECB rhetoric continues to promote more rate rises. Albeit this belief appears to be fading. In contrast to some lack of momentum in the region’s economic fundamentals.
This week’s key events in the eurozone include the EMU Flash GDP Growth Rate (Thursday).
On the back burner: the continuation of the ECB hike cycle in June and July (and September?). The impact of the Russia-Ukraine conflict on the GDP prospects and inflation projections. Inflationary risks are getting entrenched.
Technical levels to keep an eye on
So far, the pair is up 0.13% at 1.0711, with a break of 1.0779 (weekly high June 2). Aiming for 1.0807 (100-day SMA) and then 1.0879 (55-day SMA). On the downside, 1.0635 (monthly low May 31) is the first line of defense. Followed by 1.0516 (low March 15) and lastly 1.0481 (2023 low January 6).
