Euro Consolidates Post ECB Hike as US Dollar Eyes Fed Move. Where to for EUR/USD?
Euro, EUR/USD, ECB, US Dollar, Fed, China, GBP, AUD, NZD - Talking Points
- The Euro continues to trade sideways as ECB and Fed rate moves dominate
- APAC equities and growth linked currenciesare lower as risk assets slide
- All eyes on the Fed from Wednesday.Will a breakout unfold for EUR/USD?
The Euro held its ground on Monday in the aftermath of a larger than expected 50-basis points (bps) hike on Friday.
Robert Holzmann, a member of the ECB Governing Council, said late on Sunday night Austrian time, that a moderate recession may have to be tolerated by the ECB.
This is ahead of the Federal Reserve meeting on Wednesday where they are anticipated to add 75 bps to rates. The US Dollar is treading water ahead of the meeting despite Treasury yields moving lower along the curve.
APAC equities are weaker across the board to start the week following on from a soft Wall Street lead, to close last week. Soft US data on Friday followed by growing Covid cases through-out the Asian region and seemingly never-ending Chinese property woes have weighed on risk assets in the Asian session on Monday.
There are reports that Chinese government authorities are planning to put together a rescue fund to support the 12 largest developers there.
The British Pound is steady as the battle to become the next UK Prime Minister heats up between Foreign Secretary Liz Truss and former Chancellor of the Exchequer Rishi Sunak.
Crude oil has continued to move lower with the WTI futures contract trading near US$ 94 bbl and the Brent contract approaching US$ 102 bbl.
After German IFO numbers today, the US will see activity data from the Chicago and Dallas Fed.
The full economic calendar can be viewed here.
EUR/USD Technical Analysis
EUR/USD has been caught in a 1.0120 – 1.0270 range since Tuesday last week. These levels may provide support and resistance respectively.
Support might also lie at the low of 0.9952, while could be offered at the break points in the 1.0340 – 1.0360 area.
The bigger picture shows that it remains within a descending trend channel.
--- Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.