EUR/USD moving around 1.0600, far from the weekly high
The EUR/USD is trading sideways on Friday, managing to stay above 1.0600, despite the strength of the dollar and the decline in equity markets, still favored by the European Central Bank meeting on Thursday. It peaked at 1.0735, the highest since June and then pulled back to as low as 1.0590. It is up for the week, but off highs.
The ECB raised interest rates by 50 basis points on Thursday, and President Christine Lagarde gave an outlook at the press conference suggesting at least three more 50 basis point hikes to come at the next meetings. Her comments pushed German government bond yields higher while US Treasury yields held steady, giving strong support to the euro.
The common European currency was among the best performers on Thursday, in a day in which there was a sharp global decline in equity markets, amid fears of a recession.
The dollar was strengthened by the risk aversion environment. This prevented the EUR/USD from going above 1.0700 again. The ECB's tone helped it remain above 1.0600, at a time when other currencies fell to multi-day lows versus the dollar.
Technically, the EUR/USD maintains a bullish trend. The upside was capped at 1.0730 and showed signs of weakness after failing to hold above 1.0700. A consolidation above 1.0700 is needed for the euro to open the doors to more gains over the short term.
Technical indicators are neutral, and mostly flat, with no clear bias. There are some signs of bullish exhaustion (particularly the retreat from the weekly high) that could lead to a bearish correction, especially if the pair clearly breaks below 1.0600. The next strong support is seen at 1.0500. More to the downside emerges 1.0440 that if broken could change the outlook to neutral.
The ECB raised interest rates by 50 basis points on Thursday, and President Christine Lagarde gave an outlook at the press conference suggesting at least three more 50 basis point hikes to come at the next meetings. Her comments pushed German government bond yields higher while US Treasury yields held steady, giving strong support to the euro.
The common European currency was among the best performers on Thursday, in a day in which there was a sharp global decline in equity markets, amid fears of a recession.
The dollar was strengthened by the risk aversion environment. This prevented the EUR/USD from going above 1.0700 again. The ECB's tone helped it remain above 1.0600, at a time when other currencies fell to multi-day lows versus the dollar.
Technically, the EUR/USD maintains a bullish trend. The upside was capped at 1.0730 and showed signs of weakness after failing to hold above 1.0700. A consolidation above 1.0700 is needed for the euro to open the doors to more gains over the short term.
Technical indicators are neutral, and mostly flat, with no clear bias. There are some signs of bullish exhaustion (particularly the retreat from the weekly high) that could lead to a bearish correction, especially if the pair clearly breaks below 1.0600. The next strong support is seen at 1.0500. More to the downside emerges 1.0440 that if broken could change the outlook to neutral.