- The EUR/USD recovers from an intraday low as bulls look for new significant triggers in the three-day rise.
- The US dollar is under pressure despite higher rates, as a risk-on mood weighs on the currency.
- April retail sales in the United States are critical for new impulses.
EUR/USD fundamental forecast
At the start of the European session, EUR/USD was hovering at 1.04766, with a 0.41% increase so far. The pair has been trading in the green for three days now.
What to expect from the ECB?
Despite having a 30% chance of a rehashed in July for the first time in nearly a decade and pushing it out of negative territory at its September meeting.
This year, the ECB’s control of expectations of a 100bp rate rise should be enough to stabilize the EUR/USD temporarily. The European Union reduced its forecast for Eurozone growth in 2022 while nearly tripling its projection for inflation. EU authorities are concerned about repeated increases in energy prices, rising food prices, and social and economic concerns.
What did he say?
Fed Chairman Jerome Powell has frequently stated his preference for a 50 basis point (bps) rate rise in the next two meetings, which keeps pair buyers optimistic. However, a little shift in tone may cause a significant market reaction, given markets have just recently recovered from the risk-off mindset.
By emphasizing inflation as the major problem, New York Fed President John Williams endorsed Chairman Jerome Powell’s 50 basis point rate rise proposal.
The Chinese lockdown
The Covid lockdown will be lifted in Shanghai after the third straight day of no coronavirus cases outside the quarantine region. However, it’s worth mentioning that the newest statements from China State Planner, expressing the economy’s rising negative pressure, call the market’s optimism into question.
Key data releases from the EUR
On the EUR docket, we have ECB President’s Lagarde speech. Earlier, we had GDP Growth Rate, which came out to be 0.3%.
Key data releases from the US
From the US, we have the US Retail Sales for April. It bears an upbeat forecast, expected at 0.7% versus 0.5% before. Also, Fed Chairman Powell will speak.
What’s next to watch for EUR/USD?
The Fed’s interest rate decision and headlines about the Russia-Ukraine situation and Covid will be critical for the EUR/near-term USD trend.
EUR/USD technical analysis: bulls going strong but for how long?
EUR/USD has gained some pace today and has increased by 0.41%. The pair is way below its 100-day MA on the daily chart, and the RSI is edging higher. At the time of writing, the pair is trading at 1.04766.
EUR/USD is now hitting the 1.0476 level. A fall below 1.0403 will bring the pair towards the 1.0369 support level. If the pair dips below this level, the next support level will be challenged at 1.0349.
On the upside, the pair can go towards the next resistance level, around 1.0511. A break over 1.0529 will pave the door for a test of the following resistance level of 1.0642.