EUR/USD fails to rise above 1.1050

• After a strong week, the Euro is seeing some profit taking and EUR/USD has pulled back to 1.1050.
• EUR/USD’s failure to push higher beyond the 1.1100 level was also likely due to the Fed’s hawkish comments.

Although not the worst performing currency in the G10 on the day, the euro currently sits near the bottom of the relative performance table, having fallen around 0.3% against the US dollar amid late profit-taking. what has otherwise been a good week for the single currency. In fact, while it failed to hold above its 21-day moving average (currently at 1.1093) for the second day in a row, the EUR/USD It looks to end the week 1.4% higher just north of 1.1050, having risen from the 1.09050 low. That marks a first weekly gain for the pair in seven days.

The failure of EUR/USD to push higher beyond the 1.1100 level probably has something to do with very aggressive comments from the likes of Christopher Waller and James Bullard of the Fed, who gave their support for a faster pace of rate hikes. interest rates (ie, in 50 basis point intervals) this year. Both want rates to move above so-called “neutral” rates by the end of the year given high inflation and a tight labor market. His comment saw traders raise their bets on a 50bp rate hike at the next Fed meeting and comes after the Fed announced earlier in the week that it is likely to raise interest rates on every rate decision. remaining policy this year (in 25bp intervals), followed by a further four hikes in 2023.

Of course, the ECB has also been leaning in a more aggressive direction in recent weeks, as was emphasized at last week’s monetary policy meeting, where the bank laid out plans to fully end its QE program by the end of the summer to pave the way for a rate hike in the fourth quarter. This, coupled with optimism and speculation about progress towards a Russia-Ukraine peace deal, has likely been supporting the Euro this week. The big question is whether this can continue into next week: if there were more positive news flow on the Russia-Ukraine talks, a continued push to the upside would seem likely.

From a technical perspective, EUR/USD continues to find support in an uptrend from previous monthly lows and if the pair can break through resistance in the 1.1100-1.1130 area, that could open the door for a pullback to pre-trailer levels. invasion of Russia. at 11300. But that is a big if and markets are very likely to remain very choppy/headline driven for the foreseeable future.

Technical levels