Euro Makes A Date With Year-To-Date Highs On The Back Of Confidence-Boosting Bank Earnings

The Euro (EUR) almost touches year-to-date highs above 1.1000 against the US Dollar (USD) during the early European session on Tuesday. The single currency is supported by confidence-boosting Eurozone bank earnings, which suggest the sector has weathered the March crisis better than expected. Hawkish comments from rate-setters at the European Central Bank (ECB) further aid the Euro, as the expectation of higher interest rates would lift capital inflows into Europe. From a technical perspective, despite an intraday pullback, the overall trend is up, with the probabilities favoring longs over shorts. 

EUR/USD market movers

• The Euro gains strength from comments by Pierre Wunsch, president of Belgium’s Banque Nationale, who said, “We are waiting for wage growth and core inflation to go down… before we can reach a point where we can pause (hiking rates).”
• The ECB’s chief economist Philip Lane has gone on the record saying interest rates will rise at the May 4 meeting, but whether beyond that depends on the data. 
• Previously, the Irishman said a lot is riding on the state of Eurozone banks, as assessed by the ECB’s Bank Lending Survey out on May 2, as well as April flash HICP inflation data released on the same day.
• The Euro (EUR) almost touches year-to-date highs above 1.1000 against the US Dollar (USD) during the early European session on Tuesday. The single currency is supported by confidence-boosting Eurozone bank earnings, which suggest the sector has weathered the March crisis better than expected. Hawkish comments from rate-setters at the European Central Bank (ECB) further aid the Euro, as the expectation of higher interest rates would lift capital inflows into Europe. From a technical perspective, despite an intraday pullback, the overall trend is up, with the probabilities favoring longs over shorts.

EUR/USD Market Movers

• The Euro gains strength from comments by Pierre Wunsch, president of Belgium’s Banque Nationale, who said, “We are waiting for wage growth and core inflation to go down… before we can reach a point where we can pause (hiking rates).”
• The ECB’s chief economist Philip Lane has gone on the record saying interest rates will rise at the May 4 meeting, but whether beyond that depends on the data.
• Previously, the Irishman said a lot is riding on the state of Eurozone banks, as assessed by the ECB’s Bank Lending Survey out on May 2, as well as April flash HICP inflation data released on the same day.

EUR/USD Technical Analysis: Nearing Year-To-Date Highs

EUR/USD breaks out of a right-angled triangle (more clearly seen on the 4-hour chart) and unfolds another leg higher, in line with the broader medium-term uptrend that began over eight months ago. The pair is fast approaching the year-to-date highs at 1.1075. The odds favor a continuation of the dominant Euro bullish trend.

A decisive break above 1.1075, touched on April 14, would confirm the Euro’s uptrend to the following critical resistance level at around 1.1190, where the 200-week Simple Moving Average (SMA) sits.

For clarity, the definition of a ‘decisive break’ either includes a ‘breakout candle’ – a long green bullish daily candle that extends above the 1.1075 highs and closes near its high, or three smaller bullish green candles in a row that break above the highs. 

Alternatively, a break and daily close below the critical lower high at 1.0830 would doubt the uptrend’s validity and could see losses extend to a confluence of support at 1.0775-1.0800, marking a possible reversal of the dominant trend.