The EUR/USD advanced on Monday, reaching the strongest level in ten days, above 1.1000. A higher euro across the board is helping the pair, while the dollar is performing mixed. At the time of writing, the EUR/USD is trading at 1.1008, up 0.17% above its opening price after topping at 1.1019.
European equities and US stock futures are little changed, with the focus primarily on what will happen next week, which includes the Federal Reserve and the European Central Bank meetings and the US official employment report. There will be no words from FOCM officials these days (blackout period).
Markets are pricing in rate hikes from both central banks. A 25 basis points from the Fed looks like a done deal, considering recent labor market data and the stability in financial markets. It will probably be the last rate hike of the current tightening cycle. Before the meeting, the key report will be on US Q1 GDP growth on Thursday, that also includes consumer inflation.
The ECB is seen rising by 25 basis points, but it could also be a 50 basis point. If the odds of a larger rate hike increase, the euro would have scope for extra gains. Inflation and growth data from the Eurozone this week will be watched closely.
From a technical standpoint, the EUR/USD remains with a bullish bias in the short-term, particularly while above 1.0970. A consolidation above 1.1000 would strengthen the positive outlook for the euro. The next target is the 1.1045 resistance, ahead of the April high at 1.1075. The pair is moving slowly at a quiet beginning of the week.
A failure to hold above 1.1000 would suggest the pair is not ready for more gains and could likely keep moving sideways between 1.0900 and 1.1000. After that, however, the odds of a sharper bearish correction under 1.0900 would rise significantly.
European equities and US stock futures are little changed, with the focus primarily on what will happen next week, which includes the Federal Reserve and the European Central Bank meetings and the US official employment report. There will be no words from FOCM officials these days (blackout period).
Markets are pricing in rate hikes from both central banks. A 25 basis points from the Fed looks like a done deal, considering recent labor market data and the stability in financial markets. It will probably be the last rate hike of the current tightening cycle. Before the meeting, the key report will be on US Q1 GDP growth on Thursday, that also includes consumer inflation.
The ECB is seen rising by 25 basis points, but it could also be a 50 basis point. If the odds of a larger rate hike increase, the euro would have scope for extra gains. Inflation and growth data from the Eurozone this week will be watched closely.
From a technical standpoint, the EUR/USD remains with a bullish bias in the short-term, particularly while above 1.0970. A consolidation above 1.1000 would strengthen the positive outlook for the euro. The next target is the 1.1045 resistance, ahead of the April high at 1.1075. The pair is moving slowly at a quiet beginning of the week.
A failure to hold above 1.1000 would suggest the pair is not ready for more gains and could likely keep moving sideways between 1.0900 and 1.1000. After that, however, the odds of a sharper bearish correction under 1.0900 would rise significantly.