EURUSD: Trend is still bullish on daily chart

Hi Traders!
From a technical point of view, the trend is bullish on the daily chart and channel breakout should confirm another bullish leg in the short term, so the next session will be very important, let's see.

Last week we followed the EURUSD pair on intraday chart, are you interested? Click on chart below:

Trade with care
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Comment:

🔴 The dollar inched lower on Wednesday after rising in the previous session on hotter-than-expected U.S. inflation data, as investors consolidated gains ahead of more economic data this week that could further shed light on when the Federal Reserve would start cutting interest rates this year. The U.S. consumer price index (CPI) increased solidly in February, beating forecasts and suggesting some stickiness in inflation. Although the CPI rose 0.4% in February in line with forecasts, a 3.2% year-on-year gain came in just ahead of an expected 3.1% increase. Core figures also topped estimates. Markets see little chance of a Fed cut before the summer, but expectations for rate cuts in June have eased only a touch to about a 67% likelihood versus 71% earlier in the week, according to LSEG's rate probability app.

Comment:

🔴 Quiet currency markets are becoming quieter, heightening the importance of interest rates in determining the direction of currencies. EUR/USD, which is the most heavily traded currency pair and therefore more likely to have a bigger influence on wider currency markets, traded in one of the smallest annual ranges last year and looks set to trade similarly this year. Volatility expressed by currency options has tumbled this month to its lowest point in more than two years with one-month EUR/USD vol falling below 5.0.
Only a few short periods have been spent at such low levels since the single currency's inception. The slowdown in activity in FX markets is occurring when many equity markets are booming and ahead of anticipated easing cycles that may fuel the current will to take greater risks. Quiet conditions coupled with robust risk appetite are the two elements likely to fuel demand for carry trades for which the dollar and its underlying interest rate - currently 5.5% - are the benchmark. Currencies undermined by lower rates may come under more pressure while those with rates in excess of the U.S. may draw investors.
Currencies that are free-floating may do better than those that are not, but the longer this quiet spell holds, the greater the will to gamble will become, heightening demand for those that are restricted - if they are supported by a very high interest rate. Vols for some usually risky but high-yielding currencies like India's rupee, Indonesia's rupiah and Turkey's lira have collapsed, which should heighten their appeal.

Comment:

🔴 After a false breakout, the pair triggered a bearish candle by directly reaching the daily technical support. From a technical perspective, today's close could be the driver for the week.