Published on Jun 13, 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.