Daily Analysis For EUR/USD 13-06-2023

Daily Analysis For EUR/USD 13-06-2023

EUR/USD Analysis

Key Points: -


·       Buyers are showing interest in EUR/USD for the second consecutive day following a recent decline in the value of the US dollar.

·       Uncertainty surrounding the Federal Reserve's decision on interest rate hikes is causing US bond yields to decrease, putting pressure on the US dollar.

·       The Euro remains supported and strengthened by the possibility of further tightening measures by the European Central Bank (ECB).

·       Traders are now turning their attention to the German ZEW survey in search of market stimulation before the release of the US Consumer Price Index (CPI) report.

Today's Scenario: -


The EUR/USD pair is experiencing a positive rebound after pulling back from its recent two-and-a-half-week high the previous day. During the Asian session on Tuesday, the pair continued to climb steadily. However, it is important to note that the current spot prices remain below the resistance of the 100-day Simple Moving Average (SMA). Presently, the pair is trading around the 1.0780 level, showing a gain of more than 0.20% for the day.

The US Dollar (USD) is facing renewed selling pressure, reaching its lowest level since May 22. This decline in the USD is a significant factor contributing to the consecutive rise in the EUR/USD pair. The dovish comments made by influential Federal Reserve (Fed) officials have increased market expectations for a pause in the US central bank's ongoing rate-hiking cycle. Furthermore, the decline in US Treasury bond yields is adding downward pressure on the Greenback.

Conversely, the Euro is being supported by growing speculations of further tightening measures by the European Central Bank (ECB). This serves as an additional catalyst for the upward momentum of the EUR/USD pair. ECB President Christine Lagarde recently hinted that more interest rate hikes are likely, indicating that the ECB is not yet finished with raising rates, despite a decrease in consumer inflation. These developments favor bullish traders.

However, investors may exercise caution and refrain from taking aggressive positions as they await key central bank events scheduled for this week. The highly-anticipated monetary policy decision from the Fed will be announced on Wednesday, followed by the ECB meeting on Thursday. In the meantime, traders will look for guidance from the release of the German ZEW Economic Sentiment and the latest US consumer inflation data to identify short-term opportunities within the EUR/USD pair.

Diagram of EUR/USD: -

Economic Events: -

Date    Event                                                                                                                Impact    Currency

4:15     (New Zealand) Visitor Arrivals YoY                                                        Low      NZD

5:20     (Japan) BSI Large Manufacturing QoQ                                                Low      JPY

6:00     (Australia) Westpac Consumer Confidence Change                       High     AUD

6:00     (Australia) Westpac Consumer Confidence Index                           High     AUD

7:00     (Australia) NAB Business Confidence                                                 High     AUD

11:30   (Germany) Harmonised Inflation Rate MoM                                        Low      EUR

11:30   (Germany) Harmonised Inflation Rate YoY                                           Low      EUR

11:30   (Germany) Inflation Rate MoM                                                         Medium      EUR

11:30   (Germany) Inflation Rate YoY                                                            Medium      EUR

11:30   (Germany) CPI                                                                                             High      EUR

11:30   (United Kingdom) Average Earnings excl. Bonus (3Mo/Yr)              Low      GBP

11:30   (United Kingdom) Average Earnings incl. Bonus (3Mo/Yr)       Medium      GBP

11:30   (United Kingdom) Unemployment Rate                                               High      GBP

11:30   (United Kingdom) Claimant Count Change                                         High      GBP

11:30   (United Kingdom) Employment Change                                               High      GBP

11:30   (United Kingdom) HMRC Payrolls Change                                           Low      GBP

12:30   (Lithuania) Current Account                                                                    Low      EUR

12:30   (Spain) CPI                                                                                                  High      EUR

12:30   (Spain) Core Inflation Rate YoY                                                              Low       EUR

12:30   (Spain) Harmonised Inflation Rate MoM                                             Low       EUR

12:30   (Spain) Harmonised Inflation Rate YoY                                                Low       EUR

12:30   (Spain) Inflation Rate MoM                                                                     Low       EUR

12:30   (Spain) Inflation Rate YoY                                                                        Low       EUR

13:30   (China) Total Social Financing                                                               Low       CNY

13:30   (China) New Yuan Loans                                                                          Low       CNY

13:30   (China) M2 Money Supply YoY                                                               Low       CNY

13:30   (China) Outstanding Loan Growth YoY                                                Low       CNY

14:10   (Spain) 3-Month Letras Auction                                                             Low       EUR

14:30   (Euro Area) ZEW Economic Sentiment Index                            Medium        EUR

14:30   (Germany) ZEW Economic Sentiment Index                                    High        EUR

14:30   (Germany) ZEW Current Conditions                                                    Low        EUR

14:30   (United Kingdom) 10-Year Treasury Gilt Auction                             Low        GBP

14:40   (Italy) 3-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 7-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 30-Year BTP Auction                                                                  Low         EUR

15:00   (Germany) 5-Year Bobl Auction                                                          Low          EUR

15:15   (Euro Area) ECB Enria Speech                                                            Low          EUR

15:30   (Latvia) Current Account                                                                      Low         EUR

15:30   (United States) NFIB Business Optimism Index                            Low          USD

17:30   (Ecuador) Balance of Trade                                                                 Low          USD

18:00   (United States) Core Inflation Rate MoM                                 Medium          USD

18:00   (United States) Inflation Rate MoM                                                 High          USD

18:00   (United States) Core Inflation Rate YoY                                          High          USD

18:00   (United States) Inflation Rate YoY                                                    High          USD

18:00   (United States) CPI                                                                               High          USD

18:00   (United States) CPI s.a                                                                        High          USD

18:15   (Germany) Current Account                                                                Low          EUR

18:25   (United States) Redbook YoY                                                             Low          USD

19:30   (United Kingdom) BoE Gov Bailey Speech                              Medium         GBP

20:30   (United Kingdom) BoE Dhingra Speech                                         Low          GBP

21:00   (United States) 52-Week Bill Auction                                              Low          USD

22:30   (United States) 30-Year Bond Auction                                            Low          USD

Buy Scenario: -


The Euro pair continues to recover from the 10-day Exponential Moving Average (EMA), supported by bullish signals from the MACD and a positive RSI (14) line that is not indicating overbought conditions.


As a result, buyers of EUR/USD have the ability to challenge the 50% Fibonacci retracement level of the pair's upward movement from January to April, located around 1.0790.


If successful, the Euro bulls will face additional resistance at the late May swing high near 1.0830 and the 38.2% Fibonacci retracement level around 1.0865, which need to be surpassed for strong conviction, till we do not advise to buy EUR/USD currency pair.


Sell Scenario: -


On the downside, a pullback in the EUR/USD pair is unlikely unless the quote falls below the 10-EMA support at approximately 1.0745. Of particular significance, the convergence of the 200-EMA and a rising support line established two weeks ago near 1.0690 poses a formidable challenge for the bears.


In the event that the Euro bears manage to break below the 1.0645 support, an ascending support line originating from January 2023 will come into focus.


Overall, unless it breaches the 1.0690 level, the EUR/USD pair is expected to maintain its strength. Additionally, the divergence in market sentiment towards the European Central Bank (ECB) and the Federal Reserve (Fed) further supports the Euro buyers. Till then we do not advise selling EUR/USD.


Support and Resistance Level: -

Support             Resistance  

S1 1.0730   -     R1 1.0787

S2 1.0703   -     R2 1.0817

S3 1.0673   -     R3 1.0843


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