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Euro Breaking News: European Commission Spring Forecast Buoys EUR/USD

Euro Breaking News: European Commission Spring Forecast Buoys EUR/USD

Warren Venketas, Analyst

EUR/USD ANALYSIS

  • Eurozone inflation and growth revisions.
  • Hawkish Villeroy.
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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

ecb interest rate probabilties 2022

Source: Refinitiv

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

eurusd 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.

Contact and follow Warren on Twitter: @WVenketas

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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