- Stacked financial calendar subsequent week.
- ECB in focus.
- Sturdy downtrend could also be waning.
EURO FUNDAMENTAL BACKDROP
After the Federal Reserve’s hawkish slant earlier this week, the ECB might be in full view subsequent week significantly round its inflationary stance. The divergence between the 2 main central banks are stark nevertheless cash markets are usually at loggerheads with ECB officers as mirrored within the markets pricing in a 35bps price hike by the tip of the yr (whereas ECB officers reiterate the unlikelihood of a price hike by yr finish).
Inflation and GDP information is scheduled main as much as the ECB meet which can hamper hawkish strain. Each prints are anticipated decrease than prior figures though inflationary strain is probably not dismissed too rapidly as the continued Russia/Ukraine tensions proceed to weigh on European oil and gas costs. Whereas there isn’t any price hike anticipated subsequent week, readability across the thought technique of the ECB might be monitored carefully by way of the press convention post-announcement.
Supply: DailyFX Economic Calendar
EUR/USD DAILY CHART
Chart ready by Warren Venketas, IG
The Euro comes beneath heavy hearth this week post-FOMC and broke the bear flag assist zone (blue) after consolidating upwards since mid-November 2021. Swing lows had been additionally taken out yesterday at 1.1186 leaving the 1.1100 psychological stage in putting distance (final seen in Might 2021).
Draw back momentum could also be fading steered by the Relative Strength Index (RSI) transferring into oversold territory. Bullish divergence (inexperienced) may additionally be unfolding on the oscillator whereby the RSI studying opposes present EUR/USD price action.
I feel there may be extra room to run across the 1.1100 assist zone and probably 1.1000 however thereafter a reversal to the upside is probably going.
IG CLIENT SENTIMENT DATA: BEARISH
IGCS exhibits retail merchants are at present lengthy on EUR/USD, with 69% of merchants at present holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment leaving a bearish disposition on the pair.
Contact and comply with Warren on Twitter: @WVenketas