The June ECB meeting was not a major directional catalyst for EUR/USD, as expected, with the higher US CPI reading likely exerting a stronger influence overall. Looking forward, economists at TD Securities expect market attention to shift quickly to next week’s FOMC meeting. Ahead of that, they retain our sell-on-rallies bias for the pair and see moderate downside risks for the near-term.
Momentum indicators favor a sell-rallies stance
“Looking forward, we do not expect the June Governing Council meeting to cast a very long shadow over the EUR. The end of the PEPP may be starting to come into view for some of its members, but this is still an issue for the future. The region's recovery still has to remain on track for several more months first. In the meantime, other central banks will not necessarily be sitting still.”
“We expect recent ranges to remain in place for EUR/USD as market attention pivots quickly to next week’s FOMC meeting. In particular, we remain inclined to fade rallies toward the recent range tops around the 1.2250 (+/-) mark.”
“We think EUR/USD will struggle to break to new highs for the cycle unless a fresh catalyst emerges. At this point, we would have to look for this to emerge from the USD leg, as the European event risks calendar quiets down for the summer.”
“We think the pair may begin to feel the pull lower from real yield differentials. Much will depend, of course, on next week's Fed policy meeting, where we see scope for markets to price in a less-dovish view.”
“The pair's technical backdrop also suggests some moderate downside risks, in our view. Here, we think initial support will remain in place around 1.2145 (+/-), with 1.2105 and 1.2040/50 as the next main attractors to the downside. At this stage, however, we also do not look for a dramatic correction lower.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.