Economic data from the eurozone have mostly been more neutral than negative this month despite the occasional blip from Germany. That’s one of the main sources for somewhat more positive sentiment on the euro compared to early in the fourth quarter of last year combined with expectations that the ECB will continue to hike its rates strongly into the summer.
There’s now a fairly consistent trend of slower inflation in the USA while flash inflation data from some European countries this week showed continuing though small growth. The energy crisis in most of the eurozone isn’t having quite as catastrophic effects as some had predicted last summer because the prices of oil and gas have decreased significantly from peaks last year and because this winter so far has been mostly mild or average in Europe.
The chart itself definitely suggests that the euro has reached a plateau and might decline in the near future. Momentum to the upside has been low since the middle of January and the price has hovered in overbought for weeks while volume and ATR have both dropped significantly.
Based on TA alone, one might expect a retreat to the confluence of the 50 SMA and the 100% monthly Fibonacci retracement around $1.07 before a resumption of the upward movement to test $1.10. However, unexpected hawkishness from the Fed or dovishness from the ECB would drastically change this impression, so it’s critical to monitor the press conferences and Friday’s NFP.
There’s now a fairly consistent trend of slower inflation in the USA while flash inflation data from some European countries this week showed continuing though small growth. The energy crisis in most of the eurozone isn’t having quite as catastrophic effects as some had predicted last summer because the prices of oil and gas have decreased significantly from peaks last year and because this winter so far has been mostly mild or average in Europe.
The chart itself definitely suggests that the euro has reached a plateau and might decline in the near future. Momentum to the upside has been low since the middle of January and the price has hovered in overbought for weeks while volume and ATR have both dropped significantly.
Based on TA alone, one might expect a retreat to the confluence of the 50 SMA and the 100% monthly Fibonacci retracement around $1.07 before a resumption of the upward movement to test $1.10. However, unexpected hawkishness from the Fed or dovishness from the ECB would drastically change this impression, so it’s critical to monitor the press conferences and Friday’s NFP.