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EUR/USD's hidden clues & key levels? Here’s an interesting chart: the inflation differential of the US and the EU plotted against the EUR/USD pair. If we approximate the range of the inflation differential with an upper bound of 1.5 and a lower bound of -0.5, we get a compelling signal for trading the EUR/USD pair. Buying EUR/USD when the inflation differential bottoms has resulted in success 4 out of the 5 times this signal was triggered. Repeating the analysis using the preferred inflation measures for both central banks – PCE for the Federal Reserve (Fed) and EU HICP for the European Central Bank (ECB) – yields similar results. Is this spurious correlation or is there more to this? Our guess is that the inflation differential drives expectations of one central bank’s move versus the other which affects the currency pair. The upcoming US PCE release on 28th April will provide insight into whether the inflation differential between the US and EU will continue to narrow. The validity of this data remains to be seen, but it's certainly an intriguing observation to consider! The rather eventful economic calendar over the next two weeks offers opportunities for this pair. Starting with the PCE Price Index released on April 28th, it is followed by the Fed meeting on Wednesday, May 3rd and the ECB meeting on Thursday, May 4th. With these events in mind, we want to position ourselves for the flurry of announcements coming out, which could play into EUR/USD strength. The long-term price action still seems to point towards an uptrend, with the 100-day Simple Moving Average (SMA) crossing the 200-day SMA and clearly marking previous swings. The current price is also consolidating at the 1.1000 psychological level, with parity and 1.2000 levels roughly marking the EUR/USD range for the decade. Zooming in, the EURUSD has been trading in an uptrend. An attempt to break above the 1.11 level was quickly rejected, with prices trading back to the trend support shortly after. We are currently witnessing another attempt to break this same level once again. Hence, a risk-managed trade could yield opportunities here with the upcoming onslaught of announcements. Setting up a long position at the current level of 1.1074 with a tight stop just below the trend support at 1.0945 and take profit level of 1.1400 would give us a risk-reward ratio of roughly 2.5. Each 0.00005 increment per EUR in the EURUSD futures contract equal to 6.25$. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com
CME:6E1!Long
by inspirante
EUR/USD Rises Back Above 1.1000The EUR/USD advanced on Monday, reaching the strongest level in ten days, above 1.1000. A higher euro across the board is helping the pair, while the dollar is performing mixed. At the time of writing, the EUR/USD is trading at 1.1008, up 0.17% above its opening price after topping at 1.1019. European equities and US stock futures are little changed, with the focus primarily on what will happen next week, which includes the Federal Reserve and the European Central Bank meetings and the US official employment report. There will be no words from FOCM officials these days (blackout period). Markets are pricing in rate hikes from both central banks. A 25 basis points from the Fed looks like a done deal, considering recent labor market data and the stability in financial markets. It will probably be the last rate hike of the current tightening cycle. Before the meeting, the key report will be on US Q1 GDP growth on Thursday, that also includes consumer inflation. The ECB is seen rising by 25 basis points, but it could also be a 50 basis point. If the odds of a larger rate hike increase, the euro would have scope for extra gains. Inflation and growth data from the Eurozone this week will be watched closely. From a technical standpoint, the EUR/USD remains with a bullish bias in the short-term, particularly while above 1.0970. A consolidation above 1.1000 would strengthen the positive outlook for the euro. The next target is the 1.1045 resistance, ahead of the April high at 1.1075. The pair is moving slowly at a quiet beginning of the week. A failure to hold above 1.1000 would suggest the pair is not ready for more gains and could likely keep moving sideways between 1.0900 and 1.1000. After that, however, the odds of a sharper bearish correction under 1.0900 would rise significantly.
by Alex_Boltyan_FXAnalyst
EURUSD: "...It's not over yet!!"The title of this analysis reproduces with a clear synthesis the key concept about the FED's monetary policy. The inflation data released in recent weeks should not mislead us, the core data still remains high. My view at the moment is that Fed will still be hawkish through late 2023, so I expect more rate hikes at upcoming meetings. The banking sector is holding up well after Yellen reassured the markets several times about a potential banking crisis, and I also think the sector will not lack liquidity, at least for 2023. The US currency may have found a short-term bottom, but we need 1-2 sessions to confirm it. FX:EURUSD pair is still trading below its previous top, but should remain structurally well supported in medium-term. With this in mind, in next update we will try to follow the pair also from a technical point of view on intraday chart (setup). Trade with care! Like if my analysis is useful. Cheers!
by TheAnonymousBanker
EURUSD Potential Forecast | 19th April 2023Fundamental Backdrop 1. Stronger dollar and bullish sentiments in USD is being brought forward from last week. 2. However, given the interest rate differential between the 2 currencies, EURUSD is anticipated to continue bullish. Technical Confluences 1. Near-term support at 1.08848 2. Price is still forming HH and HL, on a bullish trend 3. We could see the retracement head in line with the 0.786 level on the fibs Idea Looking for price to tap the area of support at 1.08848 before heading bullish. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Long
by OlympusLab
EUR/USD - Euro gains ground as investor confidence improvesThe Eurozone economy continues to recover, but there is plenty of work ahead. The Sentix Investor Confidence index improved to -8.7 in April, above the March read of -11.1 and better than the estimate of -11.7 points. The concerns over an energy crisis in Europe this winter failed to materialize and Germany and the rest of the eurozone came out of the winter better than many had expected, given the weak global economy and the Russia-Ukraine war. Still, the economic outlook remains pessimistic, as Sentix Investor Expectations remain negative in both Germany and the eurozone, at -13 and -11.5, respectively. Still, the markets were pleased with the slight improvement in investor confidence and the euro has responded with gains of around 0.60%. Eurozone retail sales slipped to -0.8% in February, matching the forecast but contracting after an upwardly revised 0.8% gain in January. Consumers are struggling with high inflation, rising interest rates and uncertain economic conditions and are keeping a tight grip on their wallets and purses. The ECB meets next on May 4th and all indications are that it will deliver another oversize rate hike. The central bank has been aggressive, raising rates by 50 and 75 basis points in recent months. The ECB was very slow to join the rate-hiking party and the benchmark rate is only 3.50%, compared to 4.25% for the Bank of England and 5.00% for the Federal Reserve. Inflation in the eurozone has proven to be a tougher foe than expected, and core inflation surprised by accelerating in February. The US releases the March inflation report on Wednesday. Inflation has been falling, albeit at a slower pace than the Fed had expected. This has necessitated additional rate hikes, with a 25-bp increase expected at the May meeting. Headline inflation is expected to fall to 5.4% in March, down from 6% in February. The core rate is projected to inch higher to 5.6%, up from 5.5%. EUR/USD is testing support at 1.0889. Below, there is support at 1.0804 There is resistance at 1.0989 and 1.1074
by OANDA
EUR/USD edges lower as eurozone inflation slidesEUR/USD is slightly lower on Friday. In the European session, EUR/USD is trading at 1.0883, down 0.21%. The euro continues to look sharp and is poised to record its fifth winning week in a row. Eurozone headline inflation fell sharply, but the core rate ticked higher. In the US, the Core PCE Price Index was within expectations. ECB policy makers must be pinching themselves today, after eurozone headline inflation tumbled to 6.9% in March, down from 8.5% in February and below the 7.1% estimate. The massive drop was driven by the sharp decline in energy prices. Inflation hasn't been below 7% since February 2022, but the news was not all good, as March core inflation accelerated to a record 7.5%, up from 7.4% in February. Core inflation is seen as a more accurate gauge of inflation trends, which could spell trouble for the ECB in its battle to contain inflation. The ECB didn't flinch from hiking rates by 50 basis points earlier in the month, even though it was in the midst of the banking crisis. With core inflation remaining stubbornly high, the central bank will have to remain aggressive with its rate path. ECB President Lagarde has suggested that the banking crisis, which shook the financial markets, could dampen demand and lower inflation, but so far, that hasn't been the case with core inflation. What can we expect from the Federal Reserve? Market pricing has been on a roller-coaster. It was only a few weeks ago that Jerome Powell's hawkish testimony on the Hill had the markets expecting a 50-basis point hike, but the banking crisis squelched any thoughts of an oversize hike. The likelihood of a 25-bp hike is currently at 57% and a pause at 43%, according to the CME Group. The core PCE price index dropped to 0.3% m/m in February, vs. 0.5% in January and the estimate of 0.4%. On an annualized basis, the index ticked lower to 4.6%, in February, vs. 4.7% in January, which was also the estimate. This is within expectations and thus unlikely to have any impact on the Fed rate decision. EUR/USD showed little reaction to the release. EUR/USD faces resistance at 1.0916, followed by 1.1072 There is support at 1.0774 and 1.0618
by OANDA
EUR/USD - euro extends rally, market turmoil easesThe euro has put together a 3-day rally and is up again on Tuesday. In the European session, EUR/USD is trading quietly at 1.0756, up 0.30%. Let's start with some good news. European stock markets have settled down and are in positive territory. The euro took a bath last Wednesday and plunged 1.47% as Credit Suisse shares tumbled, but the currency has battled back and recovered these losses. The emergency takeover of Credit Suisse by UBS and the joint announcement by six major central banks to boost liquidity have provided some reassurance to the markets that the banking system is not in danger of collapse. That's not to say that this nasty bank crisis is behind us. Investors are still trying to come to terms with the lightning collapse of three US banks and Credit Suisse, the second-largest bank in Switzerland, all in just 11 days. Another US bank, First Republic, received an emergency injection of $30 billion from some major US banks, but this may not prove to be enough, as depositors are estimated to have removed $89 billion and the bank's shares are in freefall. In light of the bank crisis, central banks will have to weigh their moves carefully and re-evaluate rate policy. The ECB didn't flinch and delivered a 50-basis point move as promised. Had the ECB decided not to go ahead with the 50-bp hike, it risked losing credibility. As well, the ECB's primary focus remains containing inflation. With eurozone inflation running at an 8.5% clip, the ECB needed another oversize rate hike. Could the financial crisis turn out to be a blessing in disguise? Perhaps, according to ECB President Lagarde. On Monday, Lagarde told European lawmakers that market turmoil could dampen demand and "might actually do part of the work that would otherwise be done by monetary policy and interest rate hikes". Lagarde reiterated that more rate hikes were needed to curb inflation, but didn't make any commitments as to the pace of rate hikes, which makes sense, given that the current crisis is not over. EUR/USD is putting pressure on resistance at 1.0778. Next is 1.0890 There is support at 1.0647 and 1.0535
by OANDA
EURUSD Outlook 20th March 2023The EURUSD spiked significantly lower from 1.0760 down to the key support level of 1.0525 due to the Credit Suisse issue. Markets were anticipating that the European Central Bank could scale back on its rate increases from 50bps to 35bps, a contributing factor to the drop in the Euro. However, the ECB maintained its decision to hike rates by 50bps and reiterated that it intends to bring inflation down to its 2% target level and that future decisions would be data dependent. This saw the EURUSD climb steadily higher to approach the 1.07 round number resistance level again. Since the EURUSD broke above the 61.8% fib level, the price could consolidate along this level between 1.0650 and 1.07 for the interim. A break of the consolidation to the downside could see the EURUSD retest the near term support of 1.0625 which is the 38.2% fib retracement level. However, I'd still be looking for a rebound to the upside, with the immediate key resistance level at 1.0760.
Long
by JinDao_Tai
4
EUR/USD - Euro heads higher as ECB delivers 50-bp hikeIt has been a busy week for the euro, reflective of the gyrations we're seeing in the financial markets. EUR/USD has bounced back from a mid-week slide and is trading at 1.0661, up 0.46% on the day. In the midst of market turmoil and fears of a full-blown financial crisis, the ECB held its rate meeting on Thursday and had everyone guessing about its intentions. The central bank had strongly signalled it would raise rates by 50 basis points but the bank crisis certainly complicated matters. Credit Suisse shares tumbled by as much as 30% a day before the meeting, weighing on the euro and eurozone bonds. It would have been understandable if the ECB had opted for a 25-bp move due to the market mayhem, but the central bank kept its word and delivered a 50-bp hike, bringing the main rate to 3.0%. Was the 50-bp hike risky in these volatile conditions? Yes, but policy makers may have been encouraged by the Swiss National Bank stepping up and lending Credit Suisse $53 billion, and there was the issue of the ECB's credibility, after President Lagarde had essentially pledged a 50-bp increase. Also, a 50-bp was the strongest medicine the central bank could deliver in the fight against sticky inflation. Inflation may have been knocked out of the headlines this week, but it hasn't gone anywhere and remains the ECB's number one priority. There was good news as the ECB's inflation projections were revised downwards from December. Currently, inflation is expected to average 5.3% in 2023 and 2.9% in 2024, compared to the December estimate of 6.3% in 2023 and 3.4% in 2024. In her press conference after the meeting, President Lagarde was careful not to commit to further rate hikes, saying that rate decisions will be "entirely data dependent.” Still, with inflation well above the 2% target, it's a safe bet that the ECB is not done with the current rate-tightening cycle. 1.0622 has been a key level throughout the week. EUR/USD is testing resistance at this line. Next is 1.0718 There is support at 1.0542 and 1.0446
by OANDA
EUR/USD -16/03/2023-• Technical picture in favor of the bears • 2 bearish patterns on daily chart • First pattern is the broadening pattern highlighted in yellow • Second pattern is head and shoulders highlighted in green • 1.0500 support is very critical at the moment ( neckline of head and shoulders and previous pivot low ) • Yesterday's drop penetrated the 20 MA which is now acting as resistance • Bulls need to overcome 1.0730 resistance to turn the trend in their favors
by RamziAbouAbdallah-CMT
EUR/USD Holds Onto 1.06, ECB Hikes Rates Despite Banking TurmoilThe EUR/USD pair oscillates around 1.0600 on Thursday following the European Central Bank's (ECB) decision to raise rates by 50 basis points as expected, recovering some of Credit Suisse's driven losses the previous day. At the time of writing, the EUR/USD pair is trading at 1.0605, 0.23% above its opening price, after hitting a daily high of 1.0635 earlier on the day. The euro has recovered nearly a hundred pips after bottoming at a two-month low of 1.0516 on Wednesday. As widely anticipated, the ECB increased three main rates by 50 bps on Thursday, sending the deposit facility rate to 3%. The lack of forward guidance was the only notable change as the ECB highlighted the importance of the data-dependent approach, which "will be determined by the inflation outlook in light of economic and financial data." In a presser following the announcement, ECB President Christine Lagarde stated, "It's impossible to determine what the rate path will be" relating to the banking situation and the economic slowdown in the EU. However, she also said that the banking sector is currently in a much stronger position than in 2008 and that the ECB can exercise creativity in short order if there is a liquidity crisis. "We are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area," reads the statement. Meanwhile, U.S. and European yields edged lower, signaling investors seeking refuge in government bonds amid worries regarding the banking sector on both shores of the Atlantic. The U.S. 10-year Treasury yield stands at 3.44%, while the German 10-year Bund yield sits at 2.21%. Data in the U.S. showed unemployment claims dropped to 192,000 in the week ending March 10, while the housing sector reported a 13.8% increase in building permits in February. Investors' attention now turns to the Fed decision next week, pricing a 25 bps hike as the most likely outcome. From a technical perspective, the EUR/USD short-term outlook has turned neutral to slightly bearish, according to indicators on the daily chart. However, the pair still holds above the 100-day Simple Moving Average (SMA), acting as dynamic support at the 1.0560 area. A break below the 100-day SMA will pave the way to a retest of the 1.0500 psychological level and the 2023 low of 1.0483. On the flip side, resistance levels could be found at the 20-day SMA at 1.0623 and 1.0700, ahead of weekly highs at the 1.0750 region.
by Alex_Boltyan_FXAnalyst