EUR/USD Forecast: Range-trading continues, but bears become more courageous
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Subscribe to PremiumEUR/USD Current Price: 1.0522
- US Consumer Confidence plummets in June amid increased inflation concerns.
- ECB President Christine Lagarde reaffirms her intentions to hike by 25 bps in July.
- EUR/USD is gaining bearish momentum and is poised to pierce the 1.0500 threshold.
The EUR/USD pair erased its previous two-day gains and trades near the 1.0500 threshold by the end of the American session. The US currency resumed its advance ahead of Wall Street’s opening, as inflation and recession-related concerns undermined the market’s mood. EUR/USD peaked at 1.0605, but after repeatedly failing around that level, it seems bulls have finally given up.
The early advance was backed by comments from European Central Bank President Christine Lagarde. Speaking at the Central Banking Forum organized by the ECB in Portugal, Lagarde reaffirmed the central bank intends to raise rates by 25 bps in July but added that her team is ready to hike at a faster pace if needed. She also downplayed recession risks, noting that policymakers are still expecting positive growth rates. Also, ECB Pierre Wunsch said he would be comfortable with a 50 bps hike in September, as 200 bps of hikes are needed relatively fast.
Data-wise, the US published the preliminary estimate of the May Trade Balance, which posted a deficit of $104.3 billion. Also, Wholesale Inventories for the same period were up by 2%, better than the 2.2% anticipated. Finally, the country released the June CB Consumer Confidence, which fell in June to 98.7, its lowest level in over a year.
On Wednesday, the EU will publish the June Economic Sentiment Indicator, while Germany will unveil the preliminary estimates of June inflation figures. The US, on the other hand, will release the final estimate of the Q1 Gross Domestic Product and core PCE inflation data for the same period. It is worth noting that several central bankers, including Federal Reserve’s Jerome Powell and ECB’s Lagarde, will be on the wires amid the Central Banking Forum in Portugal.
EUR/USD short-term technical outlook
The EUR/USD pair is bearish according to its daily chart. A bearish 20 SMA kept capping advances while heading south below the longer ones. Technical indicators have turned lower within negative levels, reflecting increased selling interest. A daily descending trend line coming from this year high at 1.1494 currently stands at around 1.0660, providing strong resistance.
In the near term, and according to the 4-hour chart, the risk of a downward extension has increased. EUR/USD develops below all of its moving averages, with the 100 SMA extending its decline below the 200 SMA and currently converging with a flat 20 SMA. Finally, technical indicators lack directional strength, with the Momentum around its 100 level but the RSI at 44.
Support levels: 1.0500 1.0465 1.0420
Resistance levels: 1.0580 1.0615 1.0660
EUR/USD Current Price: 1.0522
- US Consumer Confidence plummets in June amid increased inflation concerns.
- ECB President Christine Lagarde reaffirms her intentions to hike by 25 bps in July.
- EUR/USD is gaining bearish momentum and is poised to pierce the 1.0500 threshold.
The EUR/USD pair erased its previous two-day gains and trades near the 1.0500 threshold by the end of the American session. The US currency resumed its advance ahead of Wall Street’s opening, as inflation and recession-related concerns undermined the market’s mood. EUR/USD peaked at 1.0605, but after repeatedly failing around that level, it seems bulls have finally given up.
The early advance was backed by comments from European Central Bank President Christine Lagarde. Speaking at the Central Banking Forum organized by the ECB in Portugal, Lagarde reaffirmed the central bank intends to raise rates by 25 bps in July but added that her team is ready to hike at a faster pace if needed. She also downplayed recession risks, noting that policymakers are still expecting positive growth rates. Also, ECB Pierre Wunsch said he would be comfortable with a 50 bps hike in September, as 200 bps of hikes are needed relatively fast.
Data-wise, the US published the preliminary estimate of the May Trade Balance, which posted a deficit of $104.3 billion. Also, Wholesale Inventories for the same period were up by 2%, better than the 2.2% anticipated. Finally, the country released the June CB Consumer Confidence, which fell in June to 98.7, its lowest level in over a year.
On Wednesday, the EU will publish the June Economic Sentiment Indicator, while Germany will unveil the preliminary estimates of June inflation figures. The US, on the other hand, will release the final estimate of the Q1 Gross Domestic Product and core PCE inflation data for the same period. It is worth noting that several central bankers, including Federal Reserve’s Jerome Powell and ECB’s Lagarde, will be on the wires amid the Central Banking Forum in Portugal.
EUR/USD short-term technical outlook
The EUR/USD pair is bearish according to its daily chart. A bearish 20 SMA kept capping advances while heading south below the longer ones. Technical indicators have turned lower within negative levels, reflecting increased selling interest. A daily descending trend line coming from this year high at 1.1494 currently stands at around 1.0660, providing strong resistance.
In the near term, and according to the 4-hour chart, the risk of a downward extension has increased. EUR/USD develops below all of its moving averages, with the 100 SMA extending its decline below the 200 SMA and currently converging with a flat 20 SMA. Finally, technical indicators lack directional strength, with the Momentum around its 100 level but the RSI at 44.
Support levels: 1.0500 1.0465 1.0420
Resistance levels: 1.0580 1.0615 1.0660
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