In case you missed it, market players believe the Fed will “skip” a rate hike in June after deciding whether to raise rates on every decision day since March 2022.
The markets’ bearish bias was supported by yesterday’s US inflation reports, which showed headline inflation slowing from 4.9% yoy to 4.0% yoy.
Does this mean losses for the US dollar and gains for its major counterparts such as the euro?
EUR/USD for one hour in forex Planned by TV
EUR/USD has turned lower from the R1 (1.0800) standard pivot point on the hourly chart, and the pair is now heading into the trend line area that the bulls and bears have been paying attention to all month.
What’s more interesting about moving to the 1.0770 – 1.0780 area is that it means EUR/USD has already fallen near it. Average daily volatility of 64 pips.
Add to that the previous resistance and support areas 61.6% Fibonacci and the 100 SMA and I wouldn’t be surprised if at least some of the euro bulls are watching.
If the Fed pauses interest rate hikes, and if the European Central Bank raises interest rates as markets expect, EUR/USD could regain its gains for the week.
However, I will not discount EUR/USD to extend its current decline.
Therefore, I am looking to enter a long position on EUR/USD around the 1.0770 – 1.0780 trendline area or 1.0740 area which is closer to the 200 SMA line and pivot point (1.0730).
Previous highs near 1.0830 look like legitimate short-term targets but I can also keep close tabs on the 1.0840 – 1.0850 area if EUR/USD gets enough bullish momentum from either the FOMC or ECB event.
What about you? Do you think that EUR/USD can extend its uptrend for the month of June?
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