EUR/USD KEY TAKEAWAYS:
- EUR/USD Struggles for Gains Despite a Weaker US Dollar to Start the Week.
- Geopolitical Tensions Around Russia Have Eased as Market Attention Turns to the ECB Central Bank Forum.
- IGCS Shows Traders are Currently Long on EUR/USD.
- To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section.
READ MORE: Gold Weekly Forecast: Bearish Breakout May be Limited as Recession Fears Grow
RUSSIA, MARKET SENTIMENT AND ECB FORUM ON CENTRAL BANKING
It has been a steady start to the week in light of Geopolitical developments over the weekend in Russia. It seems a return to normal in Moscow as the Mayor announced this morning that there would be no restrictions around the City following announcements to the contrary over the weekend. Risk sentiment and market appetite appear unfazed as any hope for an increase in demand for safe havens has thus far failed to materialize. EUR/USD is trading flat around the 1.0900 handle as the European session begins, unable to fully capitalize on early USD weakness.
Currency Strength Chart: Strongest - CAD, Weakest - USD.
Source: FinancialJuice
Markets could still face a few shocks should any material changes occur regarding the Russia situation with any further military aggression by the Wagner Group likely to see risk appetite affected. The fears around a potential leadership change in Russia or a Civil War type situation could stoke inflationary concerns once more as well and dent investor confidence.
Fridays terrible Euro Area PMI data weighed on the Euro and stoked renewed recessionary concerns. The Ifo Business Climate data is due out from Germany this morning with the figure recording its first drop in May since October 2022. It will be interesting to gauge the market reaction should we see another downside miss with forecasts at 90.7 for today’s print.
For all market-moving economic releases and events, see the DailyFX Calendar
The European Central Bank (ECB) Forum for Central Banking gets underway today with Euro bulls no doubt hoping for some support following the selloff at the backend of last week. ECB President Christine Lagarde is scheduled to speak later in the day while a host of ECB policymakers will share their thoughts in the days ahead. As mentioned recently however, the continued hawkish rhetoric by the ECB seems to have run its course with markets seemingly immune to comments of late. This undoubtedly makes the Lagarde address even more interesting as a further cue as to market participants current though processes.
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TECHNICAL OUTLOOK AND FINAL THOUGHTS
Looking at EURUSD from a technical perspective and on a daily chart and we have seen a change in structure following Fridays close. The daily candle closed below the 1.0900 handle on Friday following a few attempts last week, hinting at further downside continuation. On the weekly timeframe we printed a doji candle close as well adding further credence to a potential downside narrative.
However, EURUSD bears do face a few challenges beginning with the 50-day MA at around the 1.08750 handle and the 100-day MA around the 1.0800 handle. As much as further downside looks to be on the cards a weaker US dollar this morning will not make it easy.
EUR/USD Daily Chart – June 26, 2023
Source: TradingView
Key Levels to Keep an Eye On
Support Levels
- 1.0875 (50-day MA)
- 1.0810 (100-day MA)
- 1.0747
Resistance Levels
- 1.0950
- 1.1000
- 1.1100
IG CLIENT SENTIMENT DATA
IGCSshows retail traders are currently SHORT on EURUSD, with 54% of traders currently holding SHORT positions. At DailyFX we typically take a contrarian view to crowd sentiment, and the fact that traders are short suggests that EURUSD may enjoy a short bounce before continuing fall.
Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
