EUR/USD news and analysis
- Hawks would prefer further rally but divisions within the ECB could soon emerge
- The main technical levels of the EUR/USD pair are evaluated and analyzed. Reverse price action to start the week
- Decline in risk events scheduled in Europe and the US this week with the exception of Powell’s testimony
- The analysis in this article is used chart patterns and key Support and resistance levels. For more information visit our comprehensive website Educational library
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How to trade EUR/USD
Hawks favor more hikes but divisions within the ECB may soon emerge
Isabel Schnabel and Peter Casimir, two hawks in the ranks of the European Central Bank, have reported a preference for seeing more rate increases before they see a rise in interest rates. Schnabel chose an approach that took the risk of doing too much rather than doing too little, proving that it is more difficult to tame inflation once it has become entrenched in the economy.
On the other side of the debate is a well known dove and chief economist at the ECB, Philip Lane, who has suggested that a further hike in July is likely appropriate while refusing to commit to the same outcome at the next meeting – citing a preference for a data dependent approach.
The main technical levels of the EUR/USD pair have been assessed and analyzed
EUR/USD enjoyed a massive week to the upside last week, surging close to 200 basis points. Despite the confusing ECB press conference, the overall message from the ECB remained tightening, while US bond markets seem at odds with the Fed’s hawkish policy statement and economic outlook.
1.0965 seems to be an extension too far from last week and is still the immediate resistance level. Heading into the week, with the US holiday today in observance of Juneteenth, markets seem content with a slight countertrend move although the real test of this short-term trend will be revealed tomorrow when the US comes back online.
The immediate support is at 1.0910, where a breach and consolidation below this level could lead to a decline in prices towards 1.0760 – the next support level. For now, the MACD indicates that the bullish momentum has not yet been stamped out, as the bulls may look forward to a continuation of the bullish play after assessing the correction extension.
EUR/USD daily chart
Source: TradingView, prepared by Richard Snow
IG customer sentiment favors a bullish continuation setup after a sentiment reversal
EUR/USD IG Client Sentiment
Source: IG / DailyFX, prepared by Richard Snow
EUR/USD:Retail trader data shows that 38.00% of traders enjoy net buying With the ratio of short to long traders at 1.63 to 1. The number of traders long is 4.37% higher than yesterday and 39.12% lower than last week, while the number of traders short is 4.45% higher than yesterday and 30.37% higher from last week.
We usually take a standpoint opposed to the sentiments of the crowdand the fact that traders are holding short positions indicates that EUR/USD prices may continue to rise.
Traders are more net than yesterday and last week, and The combination of current sentiment and recent changes gives us a stronger EUR/USD-Bullish contrarian trading forecast.
Risk events for the next week
Scheduled risk events are seeing a significant drop this week with Jerome Powell’s testimony before the US Senate Banking Committee the main event.
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– Posted by Richard Snow for DailyFX.com
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