EUR/USD Forecast: Euro defines consolidation range ahead of Powell
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- EUR/USD has retreated below 1.0500 in the early European session on Wednesday.
- The risk-averse market environment helps the dollar outperform its rivals.
- Investors wait for FOMC Chairman Jerome Powell to testify before Congress.
EUR/USD has lost its bullish momentum early Wednesday and retreated below 1.0500 before recovering modestly. The pair seems to have formed a consolidation channel in the 1.0560-1.0470 range and a break out of this area could trigger the next significant move.
Hawkish comments from European Central Bank (ECB) officials helped the shared currency find demand on Tuesday. With safe-haven flows returning to markets amid escalating recession fears on Wednesday, however, EUR/USD reversed its direction.
Bloomberg reported on Wednesday that economists at Citigroup now see a nearly 50% chance of a global recession. Reflecting the risk-averse market environment, US stock index futures are down between 1.6% and 2% in the early European session.
Later in the day, FOMC Chairman Jerome Powell will testify before the US Senate Banking Committee. His prepared remarks are expected to be released before the event. As it currently stands, markets are pricing a more-than-90% probability of a 75 basis points (bps) rate hike in July. Hence, the dollar could lose interest if Powell reminds investors that they could opt for a 50 bps rate increase if they see signs of price pressures easing. On the other hand, the market positioning suggests that hawkish comments are not likely to have a significant impact on the dollar's valuation. Nevertheless, the greenback should be able to hold its ground unless risk flows start to dominate the markets.
During American trading hours, the European Commission will release the preliminary Consumer Confidence data for June. The market consensus points to a modest improvement and a disappointing print could hurt the euro and vice versa.
EUR/USD Technical Analysis
EUR/USD failed to make a four-hour close above 1.0560 on Tuesday, where the Fibonacci 50% retracement of the latest downtrend is located. This level now aligns as the upper limit of the short-term consolidation channel. 1.0600 (psychological level, Fibonacci 61.8% retracement of the latest downtrend, 100-period SMA) could be seen as the next hurdle before the pair could target 1.0660 (static level, former support).
On the flip side, a four-hour close below 1.0470 (Fibonacci 23.6% retracement) could attract sellers and open the door for an extended decline toward 1.0400 (psychological level) and 1.0380 (the end-point of the latest downtrend).
In the meantime, the Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways near 50, highlighting the pair's indecisiveness.
- EUR/USD has retreated below 1.0500 in the early European session on Wednesday.
- The risk-averse market environment helps the dollar outperform its rivals.
- Investors wait for FOMC Chairman Jerome Powell to testify before Congress.
EUR/USD has lost its bullish momentum early Wednesday and retreated below 1.0500 before recovering modestly. The pair seems to have formed a consolidation channel in the 1.0560-1.0470 range and a break out of this area could trigger the next significant move.
Hawkish comments from European Central Bank (ECB) officials helped the shared currency find demand on Tuesday. With safe-haven flows returning to markets amid escalating recession fears on Wednesday, however, EUR/USD reversed its direction.
Bloomberg reported on Wednesday that economists at Citigroup now see a nearly 50% chance of a global recession. Reflecting the risk-averse market environment, US stock index futures are down between 1.6% and 2% in the early European session.
Later in the day, FOMC Chairman Jerome Powell will testify before the US Senate Banking Committee. His prepared remarks are expected to be released before the event. As it currently stands, markets are pricing a more-than-90% probability of a 75 basis points (bps) rate hike in July. Hence, the dollar could lose interest if Powell reminds investors that they could opt for a 50 bps rate increase if they see signs of price pressures easing. On the other hand, the market positioning suggests that hawkish comments are not likely to have a significant impact on the dollar's valuation. Nevertheless, the greenback should be able to hold its ground unless risk flows start to dominate the markets.
During American trading hours, the European Commission will release the preliminary Consumer Confidence data for June. The market consensus points to a modest improvement and a disappointing print could hurt the euro and vice versa.
EUR/USD Technical Analysis
EUR/USD failed to make a four-hour close above 1.0560 on Tuesday, where the Fibonacci 50% retracement of the latest downtrend is located. This level now aligns as the upper limit of the short-term consolidation channel. 1.0600 (psychological level, Fibonacci 61.8% retracement of the latest downtrend, 100-period SMA) could be seen as the next hurdle before the pair could target 1.0660 (static level, former support).
On the flip side, a four-hour close below 1.0470 (Fibonacci 23.6% retracement) could attract sellers and open the door for an extended decline toward 1.0400 (psychological level) and 1.0380 (the end-point of the latest downtrend).
In the meantime, the Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways near 50, highlighting the pair's indecisiveness.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.