EUR/USD Forecast: Bulls encouraged by Lagarde’s hawkishness
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UNLOCK OFFEREUR/USD Current Price: 1.0685
- ECB President Christine Lagarde hinted at a rate hike as soon as July.
- The positive tone of equities maintained the greenback under selling pressure.
- EUR/USD broke above a relevant Fibonacci level and could extend its rally in the near term.
The EUR/USD pair gained momentum at the weekly opening and ended Monday trading around 1.0680. The American dollar remained weak as stocks advanced, despite concerns about inflation and growth remain the same.
The positive tone of equities and comments from European Central Bank President Christine Lagarde underpinned the pair. On the one hand, global indexes surged after US President Joe Biden said he would consider trimming Chinese tariffs imposed by the previous administration, as it would reduce tax pressures and hence, help to tame inflation.
On the other hand, Lagarde said she expects the facilities program to end “very early” in the third quarter of the year, leaving policymakers in a position to exit negative interest rates by the end of the quarter. Also, this would allow a rate hike to take place in July, in line with forward guidance, according to Lagarde.
Macroeconomic data further supported the pair, as the German IFO Survey brought positive surprises in May. The Business Climate improved to 93 from 91.9, while Expectations rose to 86.9, beating expectations. The US published the April Chicago Fed National Activity Index, which improved to 0.47 from a downwardly revised 0.36 in March.
On Tuesday, S&P Global will release the preliminary estimates of its May PMIs for the EU and the US. Additionally, the US will release April New Home Sales and the May Richmond Fed Manufacturing Index.
EUR/USD short-term technical outlook
The EUR/USD pair is trading a few pips above the 38.2% retracement of its 1.1184/1.0348 decline at 1.0670, retaining its positive tone. Technical readings in the daily chart support a bullish continuation. Indicators head firmly north within positive levels, reflecting persistent buying interest, while the pair advances beyond a now flat 20 SMA. The latter stands near the next Fibonacci support level at 1.0545.
The 4-hour chart shows that the pair has advanced above all of its moving averages, with the 20 SMA extending its advance above a now flat 100 SMA. Technical indicators stand within overbought readings, the Momentum retreating modestly but the RSI consolidating around 74.
Support levels: 1.0670 1.0615 1.0565
Resistance levels: 1.0720 1.0770 1.0810
EUR/USD Current Price: 1.0685
- ECB President Christine Lagarde hinted at a rate hike as soon as July.
- The positive tone of equities maintained the greenback under selling pressure.
- EUR/USD broke above a relevant Fibonacci level and could extend its rally in the near term.
The EUR/USD pair gained momentum at the weekly opening and ended Monday trading around 1.0680. The American dollar remained weak as stocks advanced, despite concerns about inflation and growth remain the same.
The positive tone of equities and comments from European Central Bank President Christine Lagarde underpinned the pair. On the one hand, global indexes surged after US President Joe Biden said he would consider trimming Chinese tariffs imposed by the previous administration, as it would reduce tax pressures and hence, help to tame inflation.
On the other hand, Lagarde said she expects the facilities program to end “very early” in the third quarter of the year, leaving policymakers in a position to exit negative interest rates by the end of the quarter. Also, this would allow a rate hike to take place in July, in line with forward guidance, according to Lagarde.
Macroeconomic data further supported the pair, as the German IFO Survey brought positive surprises in May. The Business Climate improved to 93 from 91.9, while Expectations rose to 86.9, beating expectations. The US published the April Chicago Fed National Activity Index, which improved to 0.47 from a downwardly revised 0.36 in March.
On Tuesday, S&P Global will release the preliminary estimates of its May PMIs for the EU and the US. Additionally, the US will release April New Home Sales and the May Richmond Fed Manufacturing Index.
EUR/USD short-term technical outlook
The EUR/USD pair is trading a few pips above the 38.2% retracement of its 1.1184/1.0348 decline at 1.0670, retaining its positive tone. Technical readings in the daily chart support a bullish continuation. Indicators head firmly north within positive levels, reflecting persistent buying interest, while the pair advances beyond a now flat 20 SMA. The latter stands near the next Fibonacci support level at 1.0545.
The 4-hour chart shows that the pair has advanced above all of its moving averages, with the 20 SMA extending its advance above a now flat 100 SMA. Technical indicators stand within overbought readings, the Momentum retreating modestly but the RSI consolidating around 74.
Support levels: 1.0670 1.0615 1.0565
Resistance levels: 1.0720 1.0770 1.0810
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