EURUSD resumes rally towards 1.0300, focus is on the ECB

• EURUSD regains traction on the upside, while US dollar continues to slide.
• Expectations of an ECB rate hike of more than 25 basis points benefit the common currency.
• Reopening of the Russian Nord Stream 1 pipeline, market sentiment remains optimistic.

The price of EURUSD is quoting near 1.0250, having found renewed bullish traction around the 1.0220 region earlier in the Asian session. the pair follows benefiting from ECB expectations and current US dollar correction in all fields.

The currency pair received a fresh wave of buying at the start of the European session on Tuesday and rose more than 100 pips to hit a two-week high at 1.0270. Although the bulls failed to sustain the upside as the price closed the day below the psychological barrier of 1.0250.

See: ECB Preview: Three critical factors to watch and why EUR/USD is going to crash

EURUSD Price Celebrates US Dollar Correction

The US dollar extends its correction this Wednesday from two-decade highs for the fifth day in a row. The revaluation of the expectations of tightening of the Reserve Bank of Australia (RBA) and the ECB is weighing heavily on the dollar. Besides, the easing fears of a 100 basis point Fed rate hike in July, as well as diminishing risks of a recession, have provided a relief to the markets, with many investors predicting that a bottom may have been reached. The optimistic tone of the markets is also contributing to the dollar’s decline compared to its main competitors.

The ECB puts on the table a rise of 50 basis points

A story about the ECB, reported by Reuters on Tuesday, suggested that central bank policy makers are willing to discuss a 50 basis point rate hike at the meeting. So a double dose of rate hikes to rein in record inflation will come as no surprise. Money markets are 40% betting on a half point rate hike this week, while betting on a 97 basis point tightening for September, after forecasting a one point hike. The ECB news has provided a much-needed tailwind for the EUR/USD recovery.

Russia’s Nord Stream 1 resumes

Russia’s Nord Stream 1 pipeline to resume gas flow at reduced levels this week. Nord Stream 1 carries more than a third of Russia’s natural gas exports to Europe and it was critical that the pipeline be restarted after being out of service for 10 days on July 11 for its annual maintenance. Markets were skeptical of Russia’s intentions, especially after Russia’s Gazprom cut gas flow through Nord Stream 1 by 60% last month. The Nord Stream news helped the EURUSD price in the current recovery.

Trade dialogue between the EU and China

Trade negotiations between the EU and China held on Tuesday yielded few concrete results, with both sides reserving a commitment to continue talking. A Chinese state media report described the discussions as “pragmatic, frank and effective”, saying they had agreed on “a series of results”. Reuters reported that progress had been made in coordinating macroeconomic policies, unblocking supply chains and reforming the global trading system. This could be seen as positive for the euro in the coming months.

Eurozone consumer confidence in the spotlight

Eurozone consumer confidence it will be released later in the day which will be interesting to watch ahead of the ECB meeting on Thursday. Before that, the current account data of the block will be reported. US existing home sales will also be closely watched as the sluggish housing market has emerged as a critical issue for the US economy.

EURUSD Price Technical Analysis

The price of EURUSD has stopped well below the 21-day moving average with a downward slope in 1.0294. The renewed rise heads back to two-week highs in 1.0270.

The breakout of the 21 SMA will open the doors to a recovery towards the descending 50 SMA in 1.0467.

The 14-day RSI is flattening out within the bearish zone, which suggests that the bulls might have a hard time on the road to recovery.

On the other hand, immediate support is located at 1.0200below which the psychological barrier of 1.0150.