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Euro struggles at 5-year lowsEUR/USD suffered a dismal week, plunging 2.33%. The euro broke below the 1.05 line on Thursday but has managed to recover. The ECB doesn't meet until June, but policy makers will be closely monitoring eurozone inflation, which continues to climb. It was only a few months ago that ECB President Lagarde was dismissive about rising inflation, saying that it was a transient development (readers will recall the exact same stance from Fed Chair Powell). We certainly won't be hearing the 'T" word anymore with regard to eurozone inflation, which hit a massive 7.5% in April. The ECB may not stay in sync with the pace of tightening by the Fed and other major central banks, but the ECB is signalling that the issue is not whether to hike, but when and by how much. There are hawkish voices within the ECB calling for a June hike, but September could be the month to circle in the calendar, which will give policy makers additional data to review before making any moves. In the case of the Fed, tighter rates are a given, with spiralling inflation, a tight labor market and robust growth. It's a trickier scenario for the ECB, as eurozone growth has not been as strong and the Ukraine war and Russian sanctions have dampened economic growth. There are concerns about stagflation, and these risks will rise as the ECB raises rates. We can expect the ECB to tighten policy in the coming months, but at a much slower pace than the Fed. The FOMC meets on Wednesday and a half-point hike from the Fed is practically a done deal. This will be a significant move, as the Fed hasn't delivered such a large rate increase in 20 years. The Fed has hinted at additional half-point rates in June and July, and some analysts are even predicting super-supersize hikes of 0.75%, which hasn't happened since 1994. The Fed is in full throttle trying to catch up to the inflation curve, and this widening of the US/Europe rate differential could push the euro to 1.03 and perhaps even to parity in the coming months. There is resistance at 1.0612 and 1.0699 1.0408 is providing support, followed by 1.0321
by OANDA
1
EURUSD: History doesn't repeat, but it rhymesWell, well, well... Interesting chart we have here. If you're a keen central bank watcher like we are at Macrodesiac, then you'll have certain comments signposted at certain dates and prices. The first one to take note of is Draghi's comment back in July 2012... WHATEVER IT TAKES This phrase is famed for 'saving' the euro back then during the sovereign debt crisis... And we saw the euro rally from lows of ~1.20, all the way up to ~1.40... But it died a death again. More recently, we have Mdme. Lagarde's famous phrase... WE ARE NOT HERE TO CLOSE SPREADS This was back in March 2020 at the start of the Covid Crisis where Eurozone sovereign debt yields were widening massively (specifically Italian BTPs vs German Bunds). Interestingly, we are seeing these spreads widening at the moment... This puts the ECB in a bit of a conundrum, since they are most probably looking to end their asset purchase programme in June and crack on with hiking... The problem here is that the market, we don't think, is likely to take the announcement of tightening as a BAD sign for the euro, when if you were looking at yield differentials, you might say that euro strength should come into play since you can earn greater interest on it. We're essentially looking at the euro doing the OPPOSITE of what happened after Draghi's and Lagarde's comments at said prices. We are therefore not unconvinced that the euro could face a similar fate as it did in the years post Draghi, where it fell from the high of ~1.40 to the low at 1.05, which in current context, could mean a fall in EURUSD to 0.90.
by FinkPro
1
Timing is everything! While the general direction for the US Fed and the ECB are similar, their timelines differ greatly! On the US Fed (USD) front, we are days away from the next FOMC meeting (4th May 2022) where market participants are expecting a 50 bps hike. On the ECB (EUR) front, the ECB is expected to taper its asset purchase program by early Q3, before it will consider any rate hikes. The difference in timelines of the Fed and ECB could provide some interesting hints on where the EURUSD is heading in the short term. With the Dollar being the first mover here, we expect strength in the dollar to drive the EURUSD lower over the short term before the ECB firms up its hike schedule. The EURUSD pair is also trading just below the 7- year support level. Zooming in on a shorter timeframe, we also spot a breakout and retest at this level, suggesting the move has begun. Entry at 1.08070, stop above 1.12080. Targets are 1.06760 and 1.03835. 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.
CME:6E1!Short
by inspirante
EUR/USD [1] Long Term Eur suffered a devaluation compared to Usd since the end of 2021. The FED anticipated the hiking interest rates compared to the ECB, so its value strengthened and the price action was strongly bearish on this asset. Actually, the price moves around the dynamic support of the big triangle drawn but the price action will be influenced by the next national bank meetings in May. Some tools indicate a possible bounce in this area but we can't only rely on them. I'll check daily parameters to understand if it could be a bounce or a break-out zone. In the first case, the price should break up the 1.10522 are to think of recuperation of the euro.* In the second case, the main areas of price checking are around: 1)1.06382 (BEARISH) 2)1.04450 (BEARISH) *See the short-medium Term Analysis on EUR/USD for a better understanding of the price action. Keep updated and subscribe!
Short
by onlychance11
EUR/USD Reverses Early Gains, Aims 1.0800The EUR/USD pair failed to secure early intraday gains and finished Thursday lower as hawkish comments from Fed Chair Jerome Powell lifted Treasury yields and the greenback during the American afternoon. The shared currency had risen on the back of comments from European Central Bank Vice President Luis de Guindos who hinted at the possibility of a first rate hike in July. However, ECB President Christine Lagarde couldn’t live up to expectations at an IMF panel in Washington. She said inflation must be address “in a gradual way,” which in contrast with Powell's comments sent EUR/USD back below 1.0850. At the same panel, Powell did signaled that a 50 bps rate hike in May was likely. “It is appropriate in my view to be moving a little more quickly,” he said. This triggered a selloff in stocks and a jump in U.S. yields. As for the EUR/USD, the pair maintains the short-term negative perspective, according to technical indicators in the daily chart, while the price failed to consolidate above the 20-day SMA, all of which favors a downward move. The RSI and the MACD remain in bears territory, although turning flat, reflecting the dwindling selling momentum. The EUR/USD would need a break below the 1.0800 to bring the bearish momentum back and expose YTD lows at 1.0757 ahead of the 1.0700 psychological level and March 2020 low of 1.0635. On the other hand, immediate resistance remains at the 20-day SMA, currently around 1.0916, followed by 1.0940 and then the 1.1000 level.
by Alex_Boltyan_FXAnalyst
A Healthy Retracement Provides Better Short Entries for EURUSDThe value of Euro dropped significantly this year due to geopolitical tension between Russia and Ukraine, which has led to an inflation in Europe. Furthermore, US raising the interest rate and a dovish statement made by the ECB during the last EU interest rate decision further provided bearish momentum for the Euro. EURUSD is now channeling in a clear downtrend, and we are only looking for sell opportunities from the pullback. This pair has dropped to a new low of 1.0760 area, formed a double bottom and broke out of its neckline, signaling the beginning of the retracement stage. The first area to watch is the upside of the short-term downtrend channel, which could be in the area of 1.0900 (approximately 150 pips of retracement). Second key area to watch is the level at the 1.0950 area (approximately 200 pips of retracement). From those levels, we will observe to see whether the price will consolidate and form a reversal pattern and then a breakout. Key fundamentals to watch for the Euro currency Due to the current geopolitical tension, Euro can be easily affected by fundamental news. This pair has been very volatile recently, and any good news from the war (unlikely but not impossible), could send this pair 100 pips to the upside. Also, we need to focus on ECB President Lagarde’s speech. If she hints any possible rate hike in the future, that could immediately provide an enormous bullish momentum for this pair. Lastly, we also need to focus on the French election. If Macron is declared a winner, we expect the result to favor the Euro. President Lagarde’s speech time: April 21st, 18:00; April 22nd, 14:00 Fed Chair Powell’s speech: April 21st, 16:00 & 18:00 French President Election 2nd Round Result: April 24, 2022 19:00 (UK time, GMT+1hour)
Short
by NicoBeau_Capital
EUR/USD Reverses Daily Gains After ECB, Targets YTD Low The EUR/USD reversed early gains and turned negative for the day following the European Central Bank decision on monetary policy. The ECB left rates unchanged, as widely anticipated, and ratified that its Asset Purchase Programme (APP) will end in the third quarter, saying that the calibration of net purchases for the third quarter will be data-dependent and reflect the Governing Council’s evolving assessment of the outlook. At a press conference, ECB President Christine Lagarde noted that risk to inflation outlook is tilted to the upside in the near term having intensified lately. The euro weakened as the knee-jerk reaction as investors were expecting a more hawkish approach from the central bank. The EUR/USD fell back below the 1.0900 mark and hit a daily low of 1.0826, losing nearly 100 pips from the daily high set at 1.0923. Meanwhile, the U.S. released retail sales data, which showed a merely 0.5% increase in March, slightly below the 0.6% forecasted, while initial jobless claims rose to 185,000 last week, above the 171,000 expected. From a technical perspective, the EUR/USD holds a bearish short-term bias as shown by indicators in the daily chart. The MACD remains in negative territory, while the RSI is gaining downward slope, showing increasing selling pressure. At the same time, the price holds well below its main moving averages, with the 20-day SMA offering immediate resistance at the 1.0965 zone. A test of the YTD lows at 1.0805 is still on the cards, while a break below this level would expose April’s 2020 low of 1.0727 and eventually 1.0700. On the other hand, if the EUR/USD manages to regain the 20-day SMA, next resistances are seen at the 1.1000 psychological level and the 1.1070 zone, ahead of the critical 1.1150 23.6% Fib retracement of the May 2021 - March 2022 fall. A recovery above this latter should alleviate the short-term bearish pressure.
by Alex_Boltyan_FXAnalyst
1
Euro dips as German inflation soarsGerman data was in the spotlight on Wednesday, with the release of German inflation and ZEW Economic Sentiment. The numbers were worrying, but the euro's response was muted, as the currency trades in the mid-1.08 range. German CPI for March came in as expected, at 7.3% YoY. Still, this was a large jump from the 5.1% gain in February and marks the highest inflation release since Germany reunified in 1990. The drivers behind the jump are not hard to identify. The ongoing war in Ukraine, which looks like it will intensify, has caused significant inflation, especially for heating oil, natural gas and food products. Heating oil, for example, has soared 144% in the past 12 months. Germany is also struggling with supply disruptions due to the Covid pandemic. This has which has resulted in shortages of computers chips and many other products and hampered the key manufacturing sector. ECB President Lagarde has gone on record as being dismissive of inflation, taking a page from (the old) Fed Chair Powell and arguing that inflation was transitive. Eurozone inflation lagged behind the numbers in the US or UK, but today's German CPI release clearly shows that eurozone inflation is red-hot and the ECB will need to be more aggressive in order to lower inflationary pressures. There was more bad news as German ZEW Economic Sentiment worsened in April, with a reading of -41.0 (-39.3 prior). This was better than the consensus of -48.0 but still points to deep pessimism over the economic outlook amongst financial experts. The Eurozone ZEW release showed similar numbers. In the US, inflation continues to spiral, with the March headline figure hitting 8.5%, YoY, the highest level since December 1981. Inflation is being driven by supply bottlenecks, rising energy and food prices, and robust consumer demand. There is resistance at 1.1008 and 1.1141 1.0838 is a weak support line. Below, there is support at 1.0705
by OANDA
German Dax Can See Deeper Correction; Support at 14000 - 13500DAX is waking up, making higher highs and higher swing low which is a bullish trend since March low, so we can expect more upside after any retracement since this is wave A, still only the first leg of a higher degree A-B-C recovery. We can actually see a completed five-wave cycle within first leg A in the 4-hour chart so looks like correction in wave B has just started. That said, an upcoming A-B-C setback can retest 14000 - 13500 support area. Also, keep in mind that if ECB turns out to be more hawkish and if we will not get any positive news out from the Ukraine-Russia situation then DAX can be easily come down into wave C. Grega
EUREX:FDAX1!
by ew-forecast
GET READY FOR SHORTFX:EURAUD The correction that occurred in the Australian currency was caused by a decrease in the trade balance in that country, causing corrections in several Australian currency pairs such as, AUD/USD , GBP/AUD , EUR/AUD and so on. Bearish potential still exists in the pair EUR/AUD Need to be careful, the rising inflation rate in Europe due to the turmoil of war, made the ECB want to raise interest rates in order to reduce the impact of inflation. This could cause an upward correction for the Euro.
Short
by ellael_ella
EURUSD: EURO Likely To Keep Falling Towards 1.07000 Support!Another EURO pair in Freefall for quite some time! Against the USD, the EURO has been free falling in the previous years to date and now the downtrend might continue as the fundamental factors are against the EURO and supported with the USD. On the technical perspective, the descending channel evident on the weekly charts should likely guide the price to the next support that lies in the 1.07000 region. However with the 1.10000 psychological level still intact on monthly Timeframe, this trade can not be executed just yet! Psychological levels are very important levels in trading that needs to be cleared on monthly timeframe basis and in this case it yet to happen. Therefore to trade this trade with good conformation, it is advisable to await for the Monthly candle to close below 1.1000 first. Once the above main criteria is met, a short trade could be executed with the details present as below: TRADE TYPE: SHORT SWING TRADE ENTRY: 1.1000 PSYCHOLOGICAL RESISTANCE (AWAIT PRICE RETEST TO ATTAIN 1:1 RR) STOP LOSS: ABOVE THE DESCENDING TRENDLINE AT 1.12500 TAKE PROFIT: 1.07000 Cheers, I hope you find this insight helpful. Please LIKE & FOLLOW for more insights into Major & Minor currency pairs.
Short
by FX618Analysis
Euro stems bleeding as CPI hits 7.5%Inflation has been skyrocketing in the US and UK, giving the Fed and BoE plenty of sleepless nights. Inflation levels had been lower in the eurozone, and ECB President Christine Lagarde has not made inflation a priority, arguing that high inflation would ease. Meanwhile, eurozone inflation for March jumped to 7.5% YoY, up from 5.9% in February and above the consensus of 6.6%. Ahead of the release, ECB Vice-President De Guindos said that inflation should peak in the next two or three months. Clearly, the ECB brass has no intention of tightening policy in response to accelerating inflation. Lagarde has acknowledged that this stance will put the ECB out of sync with the Fed but has argued that the two central banks are dealing with different economic conditions. According to Lagarde, the war in Ukraine is having a much greater effect on Europe than on the US, which requires different policies from the two central banks. Lagarde can make a case for not embarking on the same rate path as the Fed, but what happens if inflation does not peak in the next few months, as the ECB is counting on? If that happens, Lagarde could choose to stick to her guns, or she may have to finally begin to tighten policy in order to curb inflation. The week ended on a high note, as the US employment report was quite strong. Nonfarm payrolls posted a solid gain of 431 thousand, although this was shy of the estimate of 490K. The unemployment rate fell from 3.8% to 3.6% and wage growth rose to 5.6% YoY, up from 5.2%. There is weak support at 1.1049, followed by 1.0940 EUR/USD faces resistance at 1.1114 and 1.1158
by OANDA
Euro Zone inflation at record highs!This is a big issue for the ECB, and they're very much between a rock and a hard place. For years the bank has kept policy extremely easy, and the economy has largely become used to this. However, they are now facing an inflation backdrop that ironically, they probably could only dream of 10 years ago (OK maybe not as high as it currently is, but you get the point). So what do they do from here? Just now, ECB's Philip Lane said, 'today's inflation number is very high.' Clearly then, there is a hawkish pivot occurring in the ECB. And we can see that the market has been pricing *some* hawkishness since the start of the year, if we look at EURIBOR futures... EUREX:FEU31! And the current market implied data suggests that the ECB are set to embark on a hiking cycle. In picture 1, we can see the Euro Area 1wk refi rate, which suggests that by September, at least a 25bp hike is priced in... Well, that is simply way too late, so think the odds will have been frontloaded way more now. In chart 2, we can see the overall policy path, which suggests that the ECB will reach a rate of 1.00% by 2024. And in chart 3, we can see how likely behind the curve the ECB is, especially with today's inflation prints... There's likely a trade in here then. If the market is expecting rate hikes further out, but they actually happen sooner, it's likely that European risk assets will be hit, specifically credit and their corresponding spreads. This would have a knock on effect to equities. Higher refinancing rates mean tighter margins. So pay attention to the ECB going forward, since they have the greatest relative policy pivot from historical out of all central banks!
ECONOMICS:EUIRYY
by FinkPro
16
EURUSD: Fundamentals Are Against The EURO! SHORT Move FavorableA tricky scenario regarding the EURUSD! Its too oversold however the fundamentals are still very much against the EURO here. A LONG move is being capped by multiple resistance and one of the nearest trendline capping its growth is visible on the main 4H chart. Therefore a SHORT move would be favorable shall the technical criteria meet, one of them being the daily candle to needs to close below 1.09100 support which would likely give way to further drop in price. Even if the above criteria is fulfilled, the price needs to retrace considerably before a SHORT trade could be executed and to achieve a 1:1 RR. Also note that if the price hits TP target first then retraces, the trade becomes invalid. Therefore a retrace needs to take place first. All the vital details are present on the main chart to observe. Cheers, I hope you find this insight helpful. Please LIKE & FOLLOW for more insights into other major currency pairs.
Short
by FX618Analysis