EUR/USD rises firmly above 1.0700

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  • The common currency posts gains for the week of 1.57%.
  • The general weakness of the US dollar on concerns that the Fed will cause a recession, a tailwind for the EUR/USD.
  • EUR/USD Price Forecast: Failure to recapture the 50 DMA around 1.0767 would expose selling pressure.

The bulls of EUR/USD are recovering the 1.0700 level on Tuesday, courtesy of ECB policy makers who expressed the need for the central bank to exit negative rates by Q3 2022, which was underlined on Monday by the ECB president Christine Lagarde. At 1.0732, EUR/USD gains for the second day in a row.

The dollar’s weakness continues for two days as investors worry about a “possible” recession in the US.

The USD remains weak for the second day of the week and trades below 102,000, the lowest level since April 26, on growing concerns that the Federal Reserve will miss a soft landing and trigger a recession. Meanwhile, the US May Global PMIs showed mixed results, as the Services Index and the Composite Index disappointed expectations, while the Manufacturing PMI was unchanged.

Later, the Richmond Fed manufacturing index slumped to -14 vs. 15 expected, adding to the list of regional Fed manufacturing reports showing slowdown or contraction.

Meanwhile, the US 10-year yield trails the dollar and is also down 13 basis points to 2,726%.

During the Eurozone session, the EU docket witnessed the release of the S&P Global PMIs, which showed mixed results. The EU PMI manufacturing and services disappointed expectations, albeit with a slight decline. Germany’s manufacturing PMI beat expectations, continuing to be supported by Monday’s German IFO readings, which showed resilience from businesses and consumers.

On Tuesday, the ECB kept talking. ECB President Lagarde said: “I don’t think we are in a situation of increased demand at the moment. It is certainly an inflation fueled by the supply side of the economy. In that situation, We have to move in the right direction, obviously, but we don’t have to rush and we don’t have to panic.” Meanwhile, François Villeroy of the ECB added that “an increase of 50 basis points is not part of the consensus at the moment, I am clear about it. Interest rate increases will be gradual.”

Despite Lagarde and Villeroy’s efforts to back down, other ECB “hawks” made statements. The ECB’s Holzmann said a 50 basis point hike in July would be appropriate. Also, the ECB’s Kazakhs joined the list, commenting that the central bank should not rule out a 50 basis point rate hike and look for hikes in July and September, and possibly another in the fourth quarter.

In the week ahead, the EU docket is packed and will feature German Gfk Consumer Confidence, German GDP and French Consumer Confidence. In the US, Durable Goods Orders, May FOMC Minutes, US GDP Growth Estimates and the Fed’s favorite inflation gauge, Personal Consumption Expenditure (PCE).

EUR/USD Price Forecast: Technical Outlook

EUR/USD remains biased to the downside, despite the price action of the past two weeks, which formed a bottom after falling from 2021 highs around 1.2349. However, the shared coin is still hovering around April 2020 lows near 1.0727, meaning a daily close above those mentioned above would open the door for further gains. Otherwise, the EUR/USD rally to the 1.0720 area would be seen as an opportunity for EUR/USD bears to add to their positions and target a retest of the year lows at 1.0348.

To the upside, the first resistance for the EUR/USD would be the 50-day moving average (DMA) at 1.0767. A break above would expose the daily low of March 7 at 1.0805, followed by 1.0900. On the other hand, the first support of the major would be 1.0700. A break of the latter would expose the April 2017 daily low at 1.0635, followed by the 20 DMA at 1.0535.

Technical levels


Last Price Today 1.0732
Today’s Daily Change 0.0042
Today’s Daily Change % 0.39
Today’s Daily Opening 1,069
20 Daily SMA 1.0534
50 Daily SMA 1.0774
100 Daily SMA 1.1019
200 Daily SMA 1.1279
Previous Daily High 1.0698
Previous Daily Minimum 1.0552
Previous Maximum Weekly 1.0607
Previous Weekly Minimum 1.0389
Monthly Prior Maximum 1.1076
Previous Monthly Minimum 1.0471
Daily Fibonacci 38.2% 1.0642
Daily Fibonacci 61.8% 1.0608
Daily Pivot Point S1 1.0596
Daily Pivot Point S2 1.0502
Daily Pivot Point S3 1.0451
Daily Pivot Point R1 1.0741
Daily Pivot Point R2 1.0792
Daily Pivot Point R3 1.0886


Source: Fx Street

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