Daily Analysis For EUR/USD  12-05-2023

Daily Analysis For EUR/USD 12-05-2023

EUR/USD Analysis
Economic Events and Scenario for EUR/USD
Economic Events: -
04:00(New Zealand) Business Inflation ExpectationsLowNZD
04:35(Japan) 3-Month Bill AuctionLowJPY
06:00(Finland) Current AccountLowEUR
07:00(United Kingdom) Goods Trade BalanceHighGBP
07:00(United Kingdom) GDP YoYLowGBP
07:00(United Kingdom) Goods Trade Balance Non-EUHighGBP
07:00(United Kingdom) Industrial Production MoMMediumGBP
07:00(United Kingdom) Industrial Production YoYLowGBP
07:00(United Kingdom) Manufacturing Production MoMMediumGBP
07:00(United Kingdom) Manufacturing Production YoYLowGBP
07:00(United Kingdom) Construction Output YoYLowGBP
07:00(United Kingdom) Balance of TradeLowGBP
07:00(United Kingdom) GDP Growth Rate YoYHighGBP
07:00(United Kingdom) GDP Growth Rate QoQHighGBP
07:00(United Kingdom) Business Investment QoQMediumGBP
07:00(United Kingdom) Business Investment YoYLowGBP
07:00(United Kingdom) GDP MoMHighGBP
07:00(United Kingdom) GDP 3-Month AvgMediumGBP
07:00(United Kingdom) Construction Orders YoYLowGBP
07:45(France) Inflation Rate YoYMediumEUR
07:45(France) Inflation Rate MoMMediumEUR
07:45(France) Harmonised Inflation Rate MoMLowEUR
07:45(France) Harmonised Inflation Rate YoYLowEUR
08:00(China) FDI (YTD) YoYMediumCNY
08:00(Spain) CPIHighEUR
08:00(Spain) Core Inflation Rate YoYLowEUR
08:00(Spain) Inflation Rate YoYLowEUR
08:00(Spain) Inflation Rate MoMLowEUR
08:00(Spain) Harmonised Inflation Rate YoYLowEUR
08:00(Spain) Harmonised Inflation Rate MoMLowEUR
08:00(United States) Fed Bowman SpeechMediumUSD
09:00(Euro Area) ECB Guindos SpeechHighEUR
10:00(China) Current AccountMediumCNY
11:00(Spain) Consumer ConfidenceMediumEUR
11:00(Latvia) Current AccountLowEUR
12:15(United Kingdom) BoE Pill SpeechMediumGBP
13:00(United Kingdom) NIESR Monthly GDP TrackerLowGBP
13:30(United States) Export Prices YoYLowUSD
13:30(United States) Import Prices YoYLowUSD
13:30(United States) Import Prices MoMMediumUSD
13:30(United States) Export Prices MoMMediumUSD
13:45(Germany) Current AccountLowEUR
14:00(Ecuador) Balance of TradeLowUSD
15:00(United States) Michigan Consumer SentimentHighUSD
15:00(United States) Michigan Inflation ExpectationsLowUSD
15:00(United States) Michigan Consumer ExpectationsLowUSD
15:00(United States) Michigan 5 Year Inflation ExpectationsLowUSD
15:00(United States) Michigan Current ConditionsLowUSD
15:30(Canada) Senior Loan Officer SurveyMediumCAD
17:00(United States) WASDE ReportLowUSD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD

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: -
S1 1.0878-R1 1.0976
S2 1.0840-R2 1.1036
S3 1.0780-R3 1.1074


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