Ellison EUR/USD Morning analysis 13/06
Updated
With key news being released today that will ultimately decide the direction of Dollar pairs, I will be sitting and watching until it is released. That being said, Yesterdays buy predictions have come along nicely overnight but not in my trading session, unfortunately.
My main bias is undecided today, with buys above the current range at 1.079 or sells below 1.073.
FUNDAMENTAL ANALYSIS:
We had a relatively slow and steady Monday and start to the week due to markets being more focused on the US inflation data today and the upcoming federal reserve and ECB interest rate decisions this week.
We understand how much central banking monetary policy has had an effect on the market, whether it was through the stimulus phase through lockdowns or of course changing their policy stance to combat rising inflation, thus we should expect that there is a large weight on its outcome.
HOW THIS AFFECTS EUR/USD:
We are currently in secondary phases of market structure in Dollar pairs, seeing consolidations and pullbacks on the higher timeframe.
The first catalyst directly on EUR/USD is going to be US CPI today. Now the expected inflation is already forecasting generous data, with inflation expected to drop from 4.9% to 4.1%.
If we can meet these optimistic expectations then the market may start to price in a potential pivot in the interest rate hiking cycle. This would result in Dollar weakness and EUR/USD STRENGTH
However, if inflation is still elevated. It shows the Fed has more work to do to recover the economy, with focus on a potential 25 base point interest hike later this week. Leading to Dollar bullishness and EUR/USD WEAKNESS
I understand if this may be a slightly long read for your morning, but the lesson is an important one and in my opinion, should be the only focus of traders this week. Well done if you got through it.
My main bias is undecided today, with buys above the current range at 1.079 or sells below 1.073.
FUNDAMENTAL ANALYSIS:
We had a relatively slow and steady Monday and start to the week due to markets being more focused on the US inflation data today and the upcoming federal reserve and ECB interest rate decisions this week.
We understand how much central banking monetary policy has had an effect on the market, whether it was through the stimulus phase through lockdowns or of course changing their policy stance to combat rising inflation, thus we should expect that there is a large weight on its outcome.
HOW THIS AFFECTS EUR/USD:
We are currently in secondary phases of market structure in Dollar pairs, seeing consolidations and pullbacks on the higher timeframe.
The first catalyst directly on EUR/USD is going to be US CPI today. Now the expected inflation is already forecasting generous data, with inflation expected to drop from 4.9% to 4.1%.
If we can meet these optimistic expectations then the market may start to price in a potential pivot in the interest rate hiking cycle. This would result in Dollar weakness and EUR/USD STRENGTH
However, if inflation is still elevated. It shows the Fed has more work to do to recover the economy, with focus on a potential 25 base point interest hike later this week. Leading to Dollar bullishness and EUR/USD WEAKNESS
I understand if this may be a slightly long read for your morning, but the lesson is an important one and in my opinion, should be the only focus of traders this week. Well done if you got through it.
Note
Inflation actually came out 0.1% lower than forecast. Which means sentiment is going in the direction of a pivot in the FEDs monetary policy tomorrow, this is leading to more Dollar bearishness.
Note
It would be better to sit on your hands for the rest of today and tomorrow.CPI came out today only slightly lower than forecast, and this shows by the price being indecisive on the release of the news. Tomorrow won't be any better as we wait to see if the Fed decides to pivot or keep rates the same for another month.
All a bit underwhelming, really.
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