- EUR/USD has pulled back from an earlier test of its 21DMA in the upper-1.0500s and is pivoting the big figure.
- ECB and Fed speak have both been in focus recently, with both sounding more hawkish.
EUR/USD has pared some of Tuesday’s outsized gains, despite more rhetoric from ECB policymakers supporting the notion of a summer start to the upcoming rate hiking cycle on Wednesday. The pair has fallen back from earlier session highs in the 1.0560s where it tested its 21-Day Moving Average at around 1.0570 to pivot either side of the 1.0500 level, with final Eurozone Consumer Price Inflation figures for April seeing modest negative revision (though still remained at elevated levels).
At current levels just above the 1.0500 figure, the pair is trading about 0.4% lower on the day, with weakness likely also reflecting the hawkish tone of Fed Chair Jerome Powell on Tuesday and from other FOMC policymakers in recent days. To recap, the main message from the Fed Chair was that the central bank remains hyper-focused on tackling sky-high inflation and will not hesitate to move rates above so-called neutral (i.e. the 2.5% area) if required.
For now though, with Eurozone yields rallying on recent ECB hawkishness (recall Klass Knot flouting the possibility of a 50 bps rate hike in July on Tuesday) to a greater degree than US yields, rate differentials seem likely to keep the pair support in the 1.0500 area. Recent strong US data (Retail Sales on Tuesday beat expectations) coupled with positive China developments (big tech crackdown and Shanghai lockdown easing) is keeping risk appetite relatively well supported versus last week.
This is another factor helping to keep EUR/USD in the 1.0500s. But as was the case back in April, the 21DMA is likely to prove a formidable level of resistance. There is still plenty of worries about the Eurozone's economic outlook amid the fall-out of the war in Ukraine and the impact of sanctions on Russia. Looking ahead, there isn’t much of note on Wednesday’s calendar aside from some US housing data, so consolidation near 1.0500 may be the most likely outcome.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.