Daily Analysis For EUR/USD 09-06-2023
**EUR/USD Analysis**
**Key Points**
- The EUR/USD currency pair holds onto slight declines after reducing its largest daily surge in 11 weeks.
- The International Monetary Fund (IMF) advises the Federal Reserve to continue its efforts in combating inflation, while the German Finance Minister highlights a deadlock regarding the reform of EU fiscal rules.
- The willingness to take risks remains uncertain as the market awaits upcoming events such as US inflation data, Federal Reserve announcements, and the European Central Bank's decisions next week.
- The sluggish state of the markets might offer some respite for those looking to buy Euros, but the likelihood of the bearish trend making a comeback seems doubtful.
***
**Today's Scenario: -** The EUR/USD currency pair remains relatively unchanged around the 1.0780-75 level as it consolidates its significant daily increase since March leading into the European session on Friday. This indicates a lack of momentum in the market, with a light economic calendar and traders positioning themselves for important data and events next week. Recent concerns regarding the European Central Bank (ECB) and the Federal Reserve (Fed) have also influenced buyers of the major currency pair.
Yesterday's disappointing US Initial Jobless Claims, which reached their highest level since October 2021, weakened the US Dollar and pushed back the Fed's more hawkish stance. However, the International Monetary Fund (IMF) has urged the US Federal Reserve and other global central banks to maintain their current monetary policies and remain vigilant in combating inflation.
Euro traders are also reflecting on this week's growth figures from Germany and the Eurozone, which have raised concerns. German Finance Minister Christian Lindner has expressed doubts about EU states reaching a consensus in the ongoing discussions about reforming the bloc's fiscal rules. This has dampened hopes of a deal by the end of the year.
Furthermore, the recent remarks from ECB policymaker Francois Villeroy de Galhau, acknowledging a slowdown in inflation, have added to the downward pressure on the EUR/USD price.
Additionally, fears of a widespread economic downturn, especially following the surprise hawkish moves from the central banks of Australia and Canada, have also provided support for the EUR/USD bulls.
The S&P500 Futures are showing slight losses after reaching their highest levels since August 2022 on the previous day. However, the benchmark Wall Street index confirmed a bull market trend on Thursday, rising approximately 20.0% from the lows recorded in October. The US Treasury bond yields, particularly the 10-year and two-year yields, are also contributing to the risk-off sentiment in the market and providing some support to the US Dollar. After reaching their highest levels in two weeks and breaking a two-day winning streak, the yields have remained relatively stable at around 3.73% and 4.52% respectively.
Looking ahead, with a light economic calendar and a cautious mood prevailing ahead of the upcoming monetary policy meetings of the Fed and ECB, as well as the release of US inflation data, the EUR/USD pair may consolidate its significant gains from the previous day. However, it is important to closely monitor the movements in yields for clearer market directions.
***
**Diagram of EUR/USD**
**EUR/USD Analysis**
**Key Points**
- The EUR/USD currency pair holds onto slight declines after reducing its largest daily surge in 11 weeks.
- The International Monetary Fund (IMF) advises the Federal Reserve to continue its efforts in combating inflation, while the German Finance Minister highlights a deadlock regarding the reform of EU fiscal rules.
- The willingness to take risks remains uncertain as the market awaits upcoming events such as US inflation data, Federal Reserve announcements, and the European Central Bank's decisions next week.
- The sluggish state of the markets might offer some respite for those looking to buy Euros, but the likelihood of the bearish trend making a comeback seems doubtful.
***
**Today's Scenario: -** The EUR/USD currency pair remains relatively unchanged around the 1.0780-75 level as it consolidates its significant daily increase since March leading into the European session on Friday. This indicates a lack of momentum in the market, with a light economic calendar and traders positioning themselves for important data and events next week. Recent concerns regarding the European Central Bank (ECB) and the Federal Reserve (Fed) have also influenced buyers of the major currency pair.
Yesterday's disappointing US Initial Jobless Claims, which reached their highest level since October 2021, weakened the US Dollar and pushed back the Fed's more hawkish stance. However, the International Monetary Fund (IMF) has urged the US Federal Reserve and other global central banks to maintain their current monetary policies and remain vigilant in combating inflation.
Euro traders are also reflecting on this week's growth figures from Germany and the Eurozone, which have raised concerns. German Finance Minister Christian Lindner has expressed doubts about EU states reaching a consensus in the ongoing discussions about reforming the bloc's fiscal rules. This has dampened hopes of a deal by the end of the year.
Furthermore, the recent remarks from ECB policymaker Francois Villeroy de Galhau, acknowledging a slowdown in inflation, have added to the downward pressure on the EUR/USD price.
Additionally, fears of a widespread economic downturn, especially following the surprise hawkish moves from the central banks of Australia and Canada, have also provided support for the EUR/USD bulls.
The S&P500 Futures are showing slight losses after reaching their highest levels since August 2022 on the previous day. However, the benchmark Wall Street index confirmed a bull market trend on Thursday, rising approximately 20.0% from the lows recorded in October. The US Treasury bond yields, particularly the 10-year and two-year yields, are also contributing to the risk-off sentiment in the market and providing some support to the US Dollar. After reaching their highest levels in two weeks and breaking a two-day winning streak, the yields have remained relatively stable at around 3.73% and 4.52% respectively.
Looking ahead, with a light economic calendar and a cautious mood prevailing ahead of the upcoming monetary policy meetings of the Fed and ECB, as well as the release of US inflation data, the EUR/USD pair may consolidate its significant gains from the previous day. However, it is important to closely monitor the movements in yields for clearer market directions.
***
**Diagram of EUR/USD**
***
**Economic Events: -**
| GMT | Event | Impact |Currency |
|:-:| :-| :- | :- |
| 2023, June 09, 00:55 | (Canada) BoC Beaudry Speech | Low | CAD |
| 2023, June 09, 07:00 | (China) Inflation Rate MoM | Medium | CNY |
| 2023, June 09, 07:00 | (China) PPI YoY | Medium | CNY |
| 2023, June 09, 07:00 | (China) Inflation Rate YoY | High | CNY |
| 2023, June 09, 09:05 | (Japan) 3-Month Bill Auction | Low | JPY |
| 2023, June 09, 10:00 | (Netherlands) Manufacturing Production MoM | Low | EUR |
| 2023, June 09, 10:30 | (Estonia) Balance of Trade | Low | EUR |
| 2023, June 09, 10:30 | (Finland) Industrial Production YoY | Low | EUR |
| 2023, June 09, 11:30 | (Lithuania) Balance of Trade | Low | EUR |
| 2023, June 09, 11:30 | (Lithuania) PPI MoM | Low | EUR |
| 2023, June 09, 11:30 |(Lithuania) PPI YoY | Low | EUR |
| 2023, June 09, 11:40 | (China) Vehicle Sales YoY | Low | CNY |
| 2023, June 09, 12:30 | (Austria) Industrial Production YoY | Low | EUR |
| 2023, June 09, 12:30 | (Slovakia) Industrial Production YoY | Low | EUR |
| 2023, June 09, 12:30 | (Slovakia) Construction Output YoY | Low | EUR |
| 2023, June 09, 12:30 | (Slovakia) Balance of Trade | Low | EUR |
| 2023, June 09, 13:30 | (Italy) Industrial Production YoY | Low | EUR |
| 2023, June 09, 13:30 | (Italy) Industrial Production MoM | Medium | EUR |
| 2023, June 09, 13:30 | (Euro Area) ECB de Guindos Speech | High | EUR |
| 2023, June 09, 14:00 | (Slovenia) Industrial Production YoY | Low | EUR |
| 2023, June 09, 14:00 | (Euro Area) ECB Enria Speech | Low | EUR |
| 2023, June 09, 14:30 | (Greece) Industrial Production YoY | Low | EUR |
| 2023, June 09, 14:30 | (Greece) Harmonised Inflation Rate YoY | Low | EUR |
| 2023, June 09, 14:30 | (Greece) Inflation Rate YoY | Low | EUR |
| 2023, June 09, 14:30 | (Greece) Inflation Rate MoM | Low | EUR |
| 2023, June 09, 14:30 | (Malta) Balance of Trade | Low | EUR |
| 2023, June 09, 14:30 | (Malta) Industrial Production YoY | Low | EUR |
| 2023, June 09, 14:40 | (Italy) 12-Month BOT Auction | Low | EUR |
| 2023, June 09, 15:00 | (Cyprus) Balance of Trade | Low | EUR |
| 2023, June 09, 15:30 | (Spain) Consumer Confidence | Medium | EUR |
| 2023, June 09, 15:30 | (Belgium) Industrial Production YoY | Low | EUR |
| 2023, June 09, 15:30 | (Belgium) Industrial Production MoM | Low | EUR |
| 2023, June 09, 15:30 | (Latvia) Balance of Trade | Low | EUR |
| 2023, June 09, 15:30 | (Portugal) Balance of Trade | Low | EUR |
| 2023, June 09, 18:00 | (Canada) Capacity Utilization | Low | CAD |
| 2023, June 09, 18:00 | (Canada) Part Time Employment Chg | Medium | CAD |
| 2023, June 09, 18:00 | (Canada) Full Time Employment Chg | Medium | CAD |
| 2023, June 09, 18:00 | (Canada) Participation Rate | Medium | CAD |
| 2023, June 09, 18:00 | (Canada) Unemployment Rate | High | CAD |
| 2023, June 09, 18:00 | (Canada) Employment Change | High | CAD |
| 2023, June 09, 18:00 | (Canada) Average Hourly Wages YoY | Low | CAD |
| 2023, June 09, 19:30 | (El Salvador) Inflation Rate YoY | Low | USD |
| 2023, June 09, 19:30 | (El Salvador) Inflation Rate MoM | Low | USD |
| 2023, June 09, 20:30 | (Kosovo) Inflation Rate YoY | Low | EUR |
| 2023, June 09, 21:30 | (United States) WASDE Report | Low | USD |
| 2023, June 09, 22:30 | (United States) Baker Hughes Oil Rig Count | Low | USD |
| 2023, June 09, 22:30 | (United States) Baker Hughes Total Rig Count | Low | USD |
***
**Buy Scenario: -** The EUR/USD pair is currently consolidating its significant gains from the previous day, hovering within a narrow range during the Asian session on Friday. It is trading around the 1.0775-1.0780 region and appears ready to build on its recent rebound from the 1.0635 level, which was the lowest point reached since March 20th.
The sharp increase seen overnight confirms a breakout above the 1.0745 confluence level, which includes the 100-period Simple Moving Average (SMA), the 23.6% Fibonacci retracement level from the May decline, and a short-term descending trendline. This is a positive signal for bullish traders and suggests the potential for further short-term appreciation. However, it is worth noting that technical indicators on the daily chart, although recovering from negative territory, have not yet confirmed a fully bullish outlook. Therefore, any subsequent upward movement is likely to face resistance near the 1.0800 level, which is a significant psychological round-number mark and represents the 38.2% Fibonacci retracement level.
If there is sustained buying momentum, it could pave the way for additional gains and push the EUR/USD pair towards the next relevant obstacle around the 1.0860 region. This area encompasses the 200-period SMA on the 4-hour chart and the 50% Fibonacci retracement level. A decisive break above this level would indicate that the recent retracement from the one-year high reached in May has come to an end. In that case, spot prices might aim to surpass the 1.0900 level and test the 61.8% Fibonacci retracement level situated around the 1.0915-1.0920 zone, till we do not advise to buy EUR/USD currency pair.
***
**Sell Scenario: -** On the downside, the 1.0750-1.0745 resistance area now acts as a barrier against immediate downward movements, followed by the 1.0700 level. Below that, an upward sloping trendline comes into play, currently located near the 1.0680 region. If breached, the EUR/USD pair could slide back towards the swing low of May around the 1.0635 area. Further selling pressure would be seen as a bearish signal, potentially dragging spot prices below the 1.0600 mark and towards testing the intermediate support zone of 1.0540-1.0535, on the way to the psychological level of 1.0500. Till then we do not advise selling EUR/USD.
***
**Support and Resistance Level: -**
| Support | | | Resistance |
| - | -: | :- | :-: |
| S1 1.0723| - | | R1 1.0815|
| S2 1.0664| - | | R2 1.0847|
| S3 1.0632| - | | R3 1.0906|
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