Published on May 12, 2023

Daily Analysis For EUR/USD 12-05-2023

EUR/USD Analysis

Economic Events and Scenario for EUR/USD

Economic Events: -

GMT	Event	Impact	Currency
04:00	(New Zealand) Business Inflation Expectations	Low	NZD
04:35	(Japan) 3-Month Bill Auction	Low	JPY
06:00	(Finland) Current Account	Low	EUR
07:00	(United Kingdom) Goods Trade Balance	High	GBP
07:00	(United Kingdom) GDP YoY	Low	GBP
07:00	(United Kingdom) Goods Trade Balance Non-EU	High	GBP
07:00	(United Kingdom) Industrial Production MoM	Medium	GBP
07:00	(United Kingdom) Industrial Production YoY	Low	GBP
07:00	(United Kingdom) Manufacturing Production MoM	Medium	GBP
07:00	(United Kingdom) Manufacturing Production YoY	Low	GBP
07:00	(United Kingdom) Construction Output YoY	Low	GBP
07:00	(United Kingdom) Balance of Trade	Low	GBP
07:00	(United Kingdom) GDP Growth Rate YoY	High	GBP
07:00	(United Kingdom) GDP Growth Rate QoQ	High	GBP
07:00	(United Kingdom) Business Investment QoQ	Medium	GBP
07:00	(United Kingdom) Business Investment YoY	Low	GBP
07:00	(United Kingdom) GDP MoM	High	GBP
07:00	(United Kingdom) GDP 3-Month Avg	Medium	GBP
07:00	(United Kingdom) Construction Orders YoY	Low	GBP
07:45	(France) Inflation Rate YoY	Medium	EUR
07:45	(France) Inflation Rate MoM	Medium	EUR
07:45	(France) Harmonised Inflation Rate MoM	Low	EUR
07:45	(France) Harmonised Inflation Rate YoY	Low	EUR
08:00	(China) FDI (YTD) YoY	Medium	CNY
08:00	(Spain) CPI	High	EUR
08:00	(Spain) Core Inflation Rate YoY	Low	EUR
08:00	(Spain) Inflation Rate YoY	Low	EUR
08:00	(Spain) Inflation Rate MoM	Low	EUR
08:00	(Spain) Harmonised Inflation Rate YoY	Low	EUR
08:00	(Spain) Harmonised Inflation Rate MoM	Low	EUR
08:00	(United States) Fed Bowman Speech	Medium	USD
09:00	(Euro Area) ECB Guindos Speech	High	EUR
10:00	(China) Current Account	Medium	CNY
11:00	(Spain) Consumer Confidence	Medium	EUR
11:00	(Latvia) Current Account	Low	EUR
12:15	(United Kingdom) BoE Pill Speech	Medium	GBP
13:00	(United Kingdom) NIESR Monthly GDP Tracker	Low	GBP
13:30	(United States) Export Prices YoY	Low	USD
13:30	(United States) Import Prices YoY	Low	USD
13:30	(United States) Import Prices MoM	Medium	USD
13:30	(United States) Export Prices MoM	Medium	USD
13:45	(Germany) Current Account	Low	EUR
14:00	(Ecuador) Balance of Trade	Low	USD
15:00	(United States) Michigan Consumer Sentiment	High	USD
15:00	(United States) Michigan Inflation Expectations	Low	USD
15:00	(United States) Michigan Consumer Expectations	Low	USD
15:00	(United States) Michigan 5 Year Inflation Expectations	Low	USD
15:00	(United States) Michigan Current Conditions	Low	USD
15:30	(Canada) Senior Loan Officer Survey	Medium	CAD
17:00	(United States) WASDE Report	Low	USD
18:00	(United States) Baker Hughes Oil Rig Count	Low	USD
18:00	(United States) Baker Hughes Total Rig Count	Low	USD

Today's Scenario: - EUR/USD retreats from its earlier peak of 1.0925 but remains sluggish in the early hours of Friday in Europe, as traders recover from their losses after experiencing the largest weekly decline in three months. Consequently, the recent recovery of the US Dollar and the absence of clear signals from the European Central Bank (ECB) regarding a more hawkish stance, coupled with concerns surrounding the US debt ceiling, instill hope among Euro bears, pushing the currency to its lowest levels in a month.

Several ECB officials, including President Christine Lagarde, have attempted to defend the central bank's inclination towards a more hawkish approach, despite some team members interpreting the recent easing in European and German economic indicators as a sign that a policy shift may be imminent. According to Bloomberg, sources familiar with the matter state that "ECB officials are starting to acknowledge the possibility of continuing interest rate hikes in September to regain full control over inflation." Joachim Nagel, an ECB policymaker and the Chief of the Bundesbank, reiterated on Thursday that the ECB's current strategy of assessing the situation at each meeting is the appropriate course of action. He also emphasized that they are gradually moving towards more restrictive measures but have not reached that point yet.

Buy Scenario: - On the other hand, a corrective bounce in the EUR/USD pair will be difficult to materialize unless the quote manages to stay below the 1.0970 level, which now serves as a resistance after being breached.

Even if the major currency pair manages to overcome the hurdle at 1.0970, there are further obstacles that the EUR/USD bulls will need to overcome. The round figure of 1.1000 and multiple barriers around 1.1050 are likely to pose challenges before potentially guiding the bulls towards the upper boundary of the aforementioned bullish channel, which is situated near 1.1120 at the latest, till we do not advise to buy EUR/USD currency pair.

Sell Scenario: - EUR/USD sellers are currently launching an attack on the round figure of 1.0900, renewing the intraday low around 1.0910 during the mid-Asian session on Friday. This latest development signifies a significant downturn for the Euro pair as it broke through a crucial support confluence, resulting in the largest daily decline witnessed in the past two weeks.

The bearish momentum in EUR/USD is further supported by the breach of the convergence between the 21-day Exponential Moving Average (EMA) and the lower boundary of a bullish channel that had been established for a month, approximately at the 1.0970 level. In addition, the sellers are taking encouragement from bearish signals from the MACD indicator, which led to the renewal of the monthly low on Thursday.

The absence of an oversold Relative Strength Index (RSI) line also contributes to the downside bias of the Euro pair. However, the recent presence of the 50-day EMA level around 1.0895 acts as a prod for the EUR/USD bears.

If the bears manage to maintain control below 1.0895, it is possible for the currency pair to extend its decline towards the 38.2% and 50% Fibonacci retracement levels of the January-April rally, which are situated near 1.0860 and 1.0790, respectively. Till then we do not advise selling EUR/USD.

Support and Resistance Level: -