EUR/USD:FUNDAMENTAL NEWS+TECHNICAL SCENARIO | LONG SETUP 🔔

The dollar continues to outperform as EURUSD touches parity, while market sentiment across the US and Europe slump ahead of earnings season.

EURUSD touches parity, with dollar expecting to see further upside
“Dollar domination continues to remain a key thematic for markets, with EURUSD touching parity for the first time since 2002. Haven demand, the greater impact of the Russian war on Europe, and growing interest rate differentials provide plenty of reasons to expect EURUSD to break lower in a meaningful manner. The recession risk in the US does little to dent dollar demand, but traders will be keeping a close eye out for tomorrows CPI as a key driver of short-term sentiment.”

Sentiment sours in US and Europe, as investors look for Bank earnings to further inform outlook
"European sentiment continues to deteriorate as pandemic restrictions in China provide yet another headwind for businesses that are struggling with rising costs and deteriorating demand. The latest ZEW survey saw sentiment in Europe’s biggest economy fall to an 11-year low, while US small business expectations dropped to the lowest level since 2013. However, while today has highlighted the declining consumer and investor mindset, this week marks the beginning of a period which focuses on the outlook from US businesses. Rising interest rates have done little to lift bank valuations of late, and the expected downbeat outlook in the face of recession risks should keep that cap on the likes of JP Morgan and Morgan Stanley when they report on Thursday."

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