EUR/USD Opens Above the 20 SMA After ECB Lagarde Hawkish Comments
EUR/USD opened with a bullish gap yesterday above the 20 SMA after retracing last week and some hawkish comments from ECB's Lagarde
EUR/USD has been on a bullish trend since October last year and after a retreat in February due to positive economic data from the US, buyers resumed the bullish momentum and pushed the price to 1.10, with moving averages acting as support on the daily chart. That major psychological level held as resistance for some time, but was broken and the price approached 1.11. Although buyers couldn’t push the price above that level and early this month we saw a bearish reversal. The price has been declining steadily since then and it dipped to 1.0760s.
This pair experienced more bearish momentum last week, disappointing buyers after reversing into a downward trend in the previous week. Although on Friday we saw a retrace higher as the USD weakened on Jerome Powell’s comments, who hinted that the FED may be done with hiking interest rates.
The price retraced higher but buyers couldn’t push above the 20 SMA (gray) on the H4 chart, which has been acting as resistance for more than a week and EUR/USD closed below this moving average. It started this week around 1.08060 after reaching a low of 1.07600 late last week. Uncertainty over the U.S. Federal Reserve’s interest rate policy in June and the upcoming release of the FED’s FOMC Meeting Minutes on Wednesday are contributing to the currency pair’s volatility.
Besides that, ongoing U.S. debt ceiling talks and upcoming manufacturing and services PMI numbers from the U.S. and Europe may further impact trading. Global financial institutions remain cautious due to concerns about inflation and a possible recession. The U.S. will also release GDP (Gross Domestic Product) numbers on Thursday. Although it remains to be seen if buyers can hold the price above the 20 SMA, if they can, then we might see some further upside momentum until the data starts coming out tomorrow. Otherwise, sellers will resume the bearish momentum and we might see 1.07 soon.
ECB President Lagarde Spoke with Dutch Media on Sunday
- “I think we covered a large chunk of the journey toward taming inflation and bringing it back to our target,”
- “We are not done yet, we are not pausing based on the information I have today,”
- the “inflation outlook is too high and for too long.”
- “So many things can go wrong that we cannot give what we call forward guidance,”
- “I don’t have a predetermined number in my mind.”
EUR/USD Live Chart
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