Select Language

EUR/USD Current Price: 1.0707

  • ECB officials keep paving the way for a hawkish announcement this week.
  • Fears of recession among major economies were exacerbated by the World Bank.
  • EUR/USD holds within familiar levels with the bullish potential limited in the near term.

The EUR/USD pair recovered from a fresh weekly low of 1.0652, ending Tuesday with modest gains in the 1.0700 price zone. The pair advanced in the final trading session of the day, despite lingering risk aversion, as the American currency turned south as government bond yields retreated.

Concerns about possible recessions in major economies were exacerbated by a report from the World Bank, downwardly revising global growth from 4.1% to 2.9% in 2022. The President of the institution further warned that aggressive tightening could push some countries into a similar debt crisis while adding that inflation will likely drop next year but stay above central banks’ targets.

Earlier in the day, European Central Bank policymaker Madis Müller said that there is no reason to assume energy and food prices will fall, somehow confirming the central bank expects inflation to keep rising, anticipating a hawkish ECB announcement on Thursday.

On the data front, Eurozone Sentix Investor Confidence Index improved to -15.8 in June from -22.6 previously, beating expectations. The US April Goods and Services Trade Balance posted a deficit of $87.08 billion, better than the anticipated decline of $89.5 billion. US Treasury Secretary Janet Yellen testified on the Fiscal Year 2023 Budget before the Senate Finance Committee, although her words fell short of affecting financial markets.

On Wednesday, Germany will publish April Industrial Production, while the EU will offer a revision of the Q1 GDP, foreseen unchanged at 0.3% QoQ. The US will release MBA Mortgage Applications and Wholesale Inventories.

EUR/USD short-term technical outlook

The EUR/USD pair briefly fell below the 38.2% retracement of its latest daily decline at 1.0665, but it is ending the day above it. The daily chart shows that the pair keeps developing above a bullish 20 SMA, while the Momentum indicator picked up within positive levels. The RSI indicator, however, is flat at 51.

The 4-hour chart shows that the pair bounced from around a bullish 100 SMA, while a flat 20 SMA caps advances a few pips above the current level. Technical indicators, in the meantime, remain within negative levels, with the Momentum still advancing but the RSI losing its bullish strength at around 47. Overall, the upside seems limited, at least, as long as the pair remains below 1.0770.

Support levels: 1.0665 1.0620 1.0575  

Resistance levels: 1.0725 1.0770 1.0810