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EUR/USD floats above 1.0900 as ECB hawks jostle with upbeat US Banking Stress Test, Fed Powell’s speech

  • EUR/USD consolidates recent losses but lacks recovery momentum after snapping two-day winning streak.
  • ECB’s Centeno recently prod policy hawks even as Lagarde & Company kept rate hike bias intact.
  • Fed’s Powell advocates for two rate increases in 2023, rules out rate cuts.
  • German inflation data, second-tier US statistics eyed for clear directions.

EUR/USD struggles to keep the bears on board, despite posting the biggest daily loss of the week and snapping a two-day uptrend the previous day, as markets reassess the previous day’s downside bias amid Thursday’s lackluster Asian session. That said, the Euro pair picks up bids to refresh its intraday high near 1.0915 as it consolidates the latest losses ahead of German inflation data.

It should be noted that the recent comments from European Central Bank (ECB) policymaker Mario Centeno and US Treasury Secretary Janet Yellen fail to inspire the EUR/USD bears, and neither did the previous day’s hawkish statements from multiple ECB officials. The reason could be linked to more hawkish statements from Federal Reserve Chairman Jerome Powell, the upbeat outcome of the US Banking Stress Test and a likely disappointment from Germany’s inflation.

ECB talks tough

Recently, ECB’s Centeno said, per Reuters “We are reaching the time when monetary policy may pause”.

On Wednesday, a slew of European Central Bank (ECB) officials, including President Christine Lagarde, advocated for higher interest rates.

Firstly, ECB President Lagarde stated that they still have ground to cover and also added, “If the baseline stands, we know we will likely hike again in July.”

That said, ECB’s Chief Economist Philip Lane warned against betting on interest rate cuts in the next two years while Vice President Luis de Guindos said that the July rate hike is set and added, “The September move will depend on data.” On the same line, ECB policymaker Boris Vujčić mentioned, “There is a good chance of a September rate hike,” whereas Madis Muller stated that the ECB needs to look at the data for rate hikes beyond July.

Furthermore, policymaker Boštjan Vasle said, “We need to keep tightening policy at our next meeting,” but Mario Centeno appears an exception as he quoted quick easing in inflation while adding, “over-hiking isn't an acceptable position.”

On the other hand, Fed Chair Jerome Powell said, “We believe there's more restriction coming, driven by the labor market.” The policymaker also ruled out the economic downturn as the most likely case.

Elsewhere, “The Fed's ‘stress test’ exercise showed lenders, including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs, have enough capital to weather a severe economic slump, paving the way for them to issue share buybacks and dividends,” reported Reuters.

It should be noted that US Treasury Secretary Yellen recently flagged mixed concerns about the US-China ties by suggesting the visit to Beijing but showed readiness to defend US interests.

Amid these plays, S&P500 Futures print mild gains even after Wall Street closed mixed and yields remained sidelined.

Moving on, the preliminary readings of Germany’s inflation per the Harmonized Index of Consumer Prices (HICP) and Consumer Price Index (CPI) for June will be important to watch for the EUR/USD pair. Also, Fed Chair Jerome Powell’s speech in Madrid and the second-tier US data should offer an active session ahead.

Technical analysis

Unless breaking a three-week-old rising support line, around 1.0900 by the press time, EUR/USD bears struggle to keep the reins.

Additional important levels

Overview
Today last price1.0916
Today Daily Change-0.0045
Today Daily Change %-0.41%
Today daily open1.0961
 
Trends
Daily SMA201.083
Daily SMA501.0876
Daily SMA1001.0814
Daily SMA2001.0574
 
Levels
Previous Daily High1.0977
Previous Daily Low1.0902
Previous Weekly High1.1012
Previous Weekly Low1.0844
Previous Monthly High1.1092
Previous Monthly Low1.0635
Daily Fibonacci 38.2%1.0948
Daily Fibonacci 61.8%1.093
Daily Pivot Point S11.0916
Daily Pivot Point S21.0872
Daily Pivot Point S31.0842
Daily Pivot Point R11.0991
Daily Pivot Point R21.1021
Daily Pivot Point R31.1066

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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