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ECB On Watch
EURUSD is trading in a muted fashion ahead of the keenly awaited June ECB meeting later today. The bank is widely expected to cut rates by .25% in line with lower inflation and dovish ECB signals. However, the focus today will be on the guidance issued alongside the rate decision with traders keen to see whether the bank signals a steady stream of easing or a more gradual approach. The unexpected uptick in eurozone inflation at the last measure suggests that the bank will take a more cautious approach today, outlining a data dependent stance and the likelihood of an assessment period after an initial cut, if rates are reduced today.
Bullish EUR Risks
The risks for EUR today look skewed towards the upside. It seems unlikely that the bank will be more dovish than expected, given the recent uptick in inflation. As such, if the bank outlines a message of caution on rates today, EUR is likely to remain supported near-term. Additionally, if the bank opts to hold off from cutting rates today to wait for further clarity on inflation, this will also be bullish for EUR near-term. Beyond today’s ECB rate decision, the pair will also be largely driven by incoming US data with the headline NFP reading due tomorrow.
Technical Views
EURUSD
The rally in EURUSD has seen the pair breaking out above the local triangle pattern, now moving into the upper part of the longer-term bear channel. For now, 1.0937 remains the key resistance to note. To the downside, 1.0724 is key support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.