- EUR/USD is trading calmly at the 1.0750 area as traders eye this week’s ECB meeting and US CPI.
- If the ECB becomes more aggressive and price pressures in the US, the pair could break above 1.0800.
The pair EUR/USD trades above 1.0725, in quiet trading ahead of what will be a busy week for the pair. The European Central Bank (ECB) will announce its policy in June and is expected to consolidate expectations that interest rates will be positive at the end of the third quarter, and traders will analyze the tone of President Christine Lagarde on the prospects of a higher tightening as markets assess the outlook for 2023. Elsewhere, May US consumer price inflation data is due for release on Friday, which could influence Fed policy expectations.
However, the first three days of the week will be much calmer in terms of central bank events and economic data, which means that the EUR/USD will likely be driven more by things like risk sentiment, geopolitical developments, etc. This suggests that the pair may remain stuck within the recent ranges of 1.0600 to 1.0700, with the 50-day moving average acting as a magnet, as has been the case in recent days.
Some strategists believe that EUR/USD may break above 1.0800 and reach its highest levels since mid-April by the end of this week or next if the ECB is aggressive and US inflation shows signs of easing. As for the latter, the growing momentum behind the US peak inflation narrative, and thus the Fed’s top stance, has been one of the main drivers of the recent rebound from the lows of the last month below 1.0400.
Technical levels
Source: Fx Street
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