Euro Seeks Acceptance Above 1.0800 As US CPI Comes Under Spotlight

The Euro (EUR) has driven the major currency pair closer to the round-level resistance of 1.0800 after a sharp recovery from 1.0743. The EUR/USD pair has attracted investors’ attention amid a firmer risk-appetite theme and hopes of a decline in the Federal Reserve (Fed)-European Central Bank (ECB) policy divergence.

This week, the Euro expects a volatile action as ECB President Christine Lagarde announces its June interest rate decision. While the scale of volatility from the US Dollar will also increase as the Federal Reserve announces its interest rate policy on Wednesday. But before that, heavy action is anticipated from the major currency pair before releasing the United States Consumer Price Index (CPI) data (May), which will release at 12:30 GMT on Tuesday.

Daily Digest Market Movers: Euro Bulls Hopeful For A Fed-ECB Policy Divergence Decline

  • The market participants focus entirely on the US Inflation data, which will provide significant guidance about the Fed’s policy.
  • Monthly headline inflation is expected to accelerate at a pace of 0.2%, slower than the 0.4% pace recorded for April. However, the monthly rate in core CPI excluding oil and food prices, is steady at 0.4%.
  • Headline inflation is seen softening sharply amid a negative impact from the energy component, while core CPI is expected to show persistence due to solid demand for durables and services.
  • A soft reading of US CPI would bolster the case of a neutral interest rate policy announcement by the Federal Reserve as other catalysts, such as Employment and economic activities, support the unaltered interest rate decision case.
  • US Unemployment Rate has climbed to 3.7%, and weekly Initial Jobless Claims have increased for the past three weeks. US Factory activities have been contracting straight for the past seven months, and the service sector hardly shows any expansion.
  • Former Dallas Fed Bank President Robert Kaplan said in an interview early Tuesday he would support a “hawkish pause” at this week’s meeting.
  • Fed chair Jerome Powell announced that more interest rate hikes are less certain as tight lending conditions by United States commercial banks are barricading inflationary pressures.
  • US President Joe Biden will announce Federal Reserve Vice Chair and fill the vacant Fed Board seat on June 21 before the Senate Banking Committee. Fed Governor Philip Jefferson is expected to be the next vice chair, and economist Adriana Kugler would equip an open Fed Board seat.
  • ECB President Christine Lagarde is expected to raise interest rates by 25 basis points (bps) to 4.25% despite deepening fears of a European recession.
  • The final reading of the Eurozone’s Q1 Gross Domestic Product (GDP) contracted by 0.1%, led by constantly declining factory activities.
  • The German economy has already registered a recession after reporting two consecutive quarters of contraction.
  • An interest rate hike by the ECB and an unchanged policy stance by the Fed would trim the ECB-Fed policy divergence.
  • The US Dollar Index is defending its immediate support of 103.35 amid positive market sentiment.

Technical Analysis: 200-EMA Acts As A Barrier

The Euro confidently drives the major currency pair higher in a Rising Channel chart pattern on a four-hour scale. Each corrective move is considered a buying opportunity by the market participants. EUR/USD has refreshed its three-week high around 1.0800; however, the 200-period Exponential Moving Average (EMA) at around 1.0800 might act as a barricade for the Euro bulls.

Buyers could show more interest if the EUR/USD  sustained comfortably above 1.0800. The upside bias could be ruined if the major currency pair drops below the June 12 low of 1.0733.

Leave a Reply

Important Link

Fund Your Deriv Account
Withdraw Funds to Your Local Currency
VIP Trading Signals
Learn To Trade

Contact Us

Follow Us


Forex, Crypto, Options, and Binary Options have both large potential rewards and large potential risks. Therefore, before investing or trading any of the assets, ensure you are aware of and willing to accept the accompanying risks. Do not trade money you cannot afford to lose.

All Rights Reserved. None of the content of this website can be published elsewhere by any means without the prior consent of the owner(s). Please, check our terms & conditions and privacy policy before continuing to use this website.

This website and its owner(s) are not in any way liable for any incurred loss, whether caused by the information provided on this website or otherwise. The use of this website, including the content and information provided, is the user’s sole liability.