- The euro regained momentum and accelerated its gains on Monday.
- European stocks have reversed their initial rally and are trading mixed.
- EUR/USD rises to daily highs in the 1.0940/50 band.
- ECB’s Lagarde said interest rates need to be kept as high as necessary.
- Portugal’s ECB forum remains front and center.
The euro (EUR) has continued to perform well since Monday, resulting in EUR/USD It reached the 1.0940/50 band on Tuesday, a two-day high. Meanwhile, the US Dollar Index (DXY) is trading at a two-day low in the mid-102.00s as the US dollar has experienced a downward correction and US Treasury yields have shown no clear direction. On the other hand, the 10-year German federal bond yield has exceeded 2.30% and is attempting a moderate recovery.
European Central Bank (ECB) Governing Council member Martin Cazax (hawk) says interest rate hikes will continue beyond July despite economic softening, Euro/US dollar rises daily contributes to He said it is not possible at this time to determine how much interest rates will rise. He also said the market was making a mistake by predicting rate cuts.
In support of the single-currency bidding bias, ECB President Lagarde argued that inflation in the euro zone is too high, confirming the ECB’s commitment to meeting its inflation target regardless of the circumstances. Lagarde intends to keep interest rates high for as long as necessary, stressing the need to introduce sufficiently restrictive interest rates. He also pointed out that the impact of rising wages on inflation has increased recently. He also said the full results of the cumulative rate hikes implemented since July last year have not yet been observed.
Finally, ECB Governing Council member Gediminas Simkus (hawkish) suggested that a September rate hike should not be ruled out, keeping interest rates at a restrictive level to lock in the ECB’s inflation target. I repeated that I had to.
Meanwhile, Portugal’s annual ECB Forum on Central Banks enters its second day, with ECB President Christine Lagarde, Board members Fabio Panetta (dovish), Isabel Schnabel (hawkish), Frank Elderson (centrist) is scheduled. talk.
Debate continues over possible next steps in monetary policy normalization for the Federal Reserve and European Central Bank amid growing speculation of an economic slowdown on both sides of the Atlantic.
Recent comments and testimony from Chairman Jerome Powell suggest investors expect the ECB to raise rates by another 25bps in July, while the Fed is expected to follow suit.
As for US data, May’s durable goods orders and new home sales, April’s FHFA house price index, and this month’s Conference Board consumer confidence index will be released later.
Daily Digest Market Trends: Euro Looks Like Bids Above 1.0900
- Additional US dollar selling is lending a leg to the euro on Tuesday.
- Italian consumer confidence showed a surprising upturn in June.
- ECB President Lagarde has reiterated that inflation is still too high.
- ECB Kazak suggested it was too early to negotiate a rate cut.
- ECB President Shimkus didn’t close the door on his September interest rate hike.
- US and German yields attempt a gentle rebound to European mornings.
- Investor attention will be focused on the release of US consumer confidence.
Technical reasons why: Euro still supported at 1.0840 zone
EUR/USD manages to gather momentum, initially embarking on a potential rally to June peak of 1.1012 (22nd June) before 2023 high of 1.1095 (26th April) Immediately followed by round level 1.1100. North of here emerges a weekly top at 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1181 and just before another round level of 1.1200.
On the downside, the June low of 1.0844 (June 23) has emerged as immediate support ahead of the provisional 100-day SMA of 1.0811. The latter loss reveals a deeper pullback to the May low of 1.0635 (May 31) above the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6). It will be.
Our constructive view on EUR/USD looks set to remain unchanged as long as the pair continues to trade above the critical 200-day SMA (1.0572 today).