• EUR/USD gains were limited after ECB rate hikes and hawkish remarks from central bankers.
  • US consumer sentiment is improving, supporting a stronger USD; Inflation in the Eurozone is slowing as expected.
  • The hawkish attitudes of the representatives of the ECB and the Fed indicate possible further tightening.
  • Upcoming key events include Germany’s May PPI, EU General Council meeting and US housing market data.

EUR/USD’s rally stalled on the European Central Bank’s (ECB) rate hike, paring some of its previous day’s gains amid mixed market sentiment. After the decisions of the Federal Reserve System (Fed) and the ECB, besides inflation in the Eurozone (EU), central bank spokespeople appear the most, amid a lack of news. At the time of writing, EUR/USD is trading at 1.0920, down 0.23%.

Mixed market sentiment after central bank decision, eurozone inflation slows.

The mood of market participants is mixed, as shown by US stocks. The latest round of economic data from the United States (US) showed an improvement in consumer sentiment as revealed by the University of Michigan (UoM) at 68.0 vs. May’s final 64.9. In terms of one-year inflation expectations, there was a downward revision from May’s 4.2 %, while the June data came in at 3.3%.

EUR/USD weakened amid comments from Federal Reserve and European Central Bank officials, with stances leaning hawkish. Monetary Policy. It must be said that the US dollar (USD) is showing signs of strength US dollar index (DXY) gains 0.21% to 102.364.

In the Eurozone (EU), inflation data slowed to 6.1% year-on-year in May, as expected, down from 7% in April. Meanwhile, the ECB’s two central bankers, Mario Centeno and Pierre Wunsch, delivered hawkish remarks and hinted that further rate hikes were needed. Mario Centeno added that “the risk of interest rates rising again” exists if prices do not slow down. Meanwhile, Pierre Wunsch said: “The ECB could raise rates again in September if there is no substantial fall in core inflation.”

On the other side of the pond, Federal Reserve officials, although moderated at the June FOMC meeting, are stunned by the hawkish stance following the decision. Richmond Fed President Thomas Barkin said it is “more comfortable to do more” if inflation eases. Later, Fed Governor Christopher Waller later added that slow progress in inflation “will likely require further tightening.”

EUR/USD retook some of its weekly gains. The Fed The ECB and ECB stances are on the table, with both central banks targeting another 50bps tightening, which could spur some consolidation on the EUR/USD.

Upcoming events

Eurozone docket: Will include Germany’s May PPI, EU General Council meeting, June consumer confidence flash and Spanish GDP data, along with global S&P PMIs for Spain, Germany, France and the bloc.

US economic agenda: Fed spokesperson, real estate data and S&P global PMI.

EUR/USD Price Analysis: Technical Outlook

From a technical point of view, EUR/USD remains biased up, set to test 1.1000. The daily exponential moving average (EMA) sits well below the exchange rate, indicating that further upside is expected. Still, the three-day rate of change (RoC) shows that buyers are losing ground, and the relative strength index (RSI) indicator remains in bullish territory but stagnant. Pro-inflation risks lie at 1.1000, followed by a YTD high at 1.1095. Conversely, a break below 1.0900 could reveal the 50-day EMA at 11.0820, ahead of the confluence of the 20-day EMA and the June 15 daily low of 1.0803/05

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