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EUR/USD ANALYSIS
EURO FUNDAMENTAL BACKDROP
The European Commission’s Spring Forecast for 2022 revised Eurozone inflation upward to 6.1% in 2022 as expected with forecasts expected to decline to 2.7% in 2023. Growth projections in the region were subsequently lowered to 2.3% from 2.7% in February.
Initial reaction from the Euro was positive with higher inflation potentially leading to a more aggressive ECB. Money markets are looking more hawkish than last week Friday with roughly 94bps priced in for 2022 as opposed to 80-85bps on Friday. The ECB’s Villeroy added support for the Euro stating that the June meet will be “decisive” while moving towards a “neutral rate”.
ECB INTEREST RATE PROBABILITIES
Source: Refinitiv
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Resistance levels:
- 1.0600
- 20-day EMA (purple)
Support levels:
- 1.0400
- 1.0340 – 2017 swing low
- 1.0064 (76.4% Fibonacci)
IG CLIENT SENTIMENT DATA: CAUTIOUS
IGCS shows retail traders are currently LONG on EUR/USD, with 76% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, recent changes in long and short positioning result in a mixed bias.
| Change in | Longs | Shorts | OI |
| Daily | 1% | 0% | 1% |
| Weekly | 10% | -13% | 0% |
Contact and follow Warren on Twitter: @WVenketas
