EUR/USD Rallies as ECB Minutes Show Readiness to Act

  • EURUSD
    (${instrument.percentChange}%)

EUR/USD Analysis

The European Central Bank (ECB) published earlier today, the accounts of its April policy meeting which were somewhat hawkish, since they revealed that some officials believe it was important "to act without undue delay" in order to show the bank's resolve to achieve price stability. [1]

This comes in a backdrop of hawkish commentary from various ECB members, which have called for rate hikes as early as July. President Ms Lagarde firmed up her rhetoric last week, saying that the asset purchases program (APP) "should be concluded early in the third quarter" and noted that action on rates could follow within a "period of only a few weeks". [2]

The US Dollar is having a bad week despite Wednesday's rise due to broader risk aversion and Mr Powell's comments on Wall Street Journal's Future of Everything Festival, where he reasserted the bank's hawkishness and its resolve to bring inflation down. [3]

EUR/USD set new five-year lows (1.0348) last week, but the Relative Strength Index (RSI) diverged higher and the current week is profitable. We still see a case new month highs and a test of the EMA200 (1.0642-60), but we remains cautious and fresh impetus will be likely required for daily closes above this area. Successful effort would pause downward bias and could open the door for a recovery towards the ascending trendline from the 2022 highs (at round 1.0860-80).

Trade the News: View our Economic Calendar

Despite the jovial mood, the pair comes from a six-weeks losing streak and as long as it trades below the EMA200 medium term bias remains on the downside, while the monetary policy differential is still unfavorable. As such, EUR/USD is in danger of a push back below 1.0500, although bears may find it hard to re-challenge 1.0339 under these conditions.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 19 May 2022 https://www.ecb.europa.eu/press/accounts/2022/html/ecb.mg220519~c9200dba08.en.html

2

Retrieved 19 May 2022 https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220511~4c8d4500f6.en.html

3

Retrieved 01 Jul 2022 https://www.youtube.com/watch

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}