EUR/USD nears key hurdle, eyes ECB

EUR/USD is fast closing on the 200-week simple moving average (SMA) hurdle at 1.1333 at press time. The bulls have failed to keep gains above the long  |  13/07/2020 05:10
  • EUR/USD eyes key technical resistance as risk-on weighs over the US dollar. 
  • The shared currency is at the mercy of the broader market sentiment as the data calendar is light on Monday. 
  • ECB may sound cautiously optimistic on Thursday, putting a strong bid under the EUR. 

EUR/USD is fast closing on the 200-week simple moving average (SMA) hurdle at 1.1333 at press time. The bulls have failed to keep gains above the long-term SMA in five out of the past six weeks. 

The pair is reporting a 0.30% gain as the uptick in the US stock futures is keeping the US dollar under pressure. As of writing, the futures on the S&P 500 are up nearly 0.5%, meaning the US equities are likely to extend Friday's rally. 

Focus on the ECB

The data calendar is empty on Monday. As such, the pair is likely to track the broader market sentiment, which is currently looking risk-on, as noted earlier. 

The main event of the week, however, is the European Central Bank's (ECB) rate decision, due on Thursday. "We expect a repetition of recent comments from various governing council members, thereby striking a cautiously optimistic tone compared to the June projections. We also expect they may decide not to use the EUR 1,350 billion pandemic emergency purchase program (PEPP) envelope in full. No new initiatives are expected next week," analysts at Danske Bank wrote in their research note titled "ECB Research - Steady course, but cautiously optimistic".

That said, Danske Bank analysts believe markets may not be prepared for a "less dovish" outcome. Currently, markets are pricing 7 basis points of rate cuts at the trough by the end of next year.

Moreover, the true extent of the damage caused by the coronavirus outbreak in the second quarter only becomes clear towards the end of the month with the first estimates for GDP growth. In addition, the Eurozone is witnessing a rebound in economic activity, driven by the lifting of the lockdown measures. 

Hence, the ECB is unlikely to ramp up stimulus this week or hint at additional easing and may sound less dovish, in which case, the shared currency would pick up a strong bid. "We remain constructive and expect the broad USD to decline over the coming months. In turn, our 3M forecast is 1.15," Danske Bank analysts noted.

Technical levels

 

Share

Popular News

Market Insight's Views

Market Insight analyses will provide both fundamental and technical comprehensions on FX
and other asset classes for Market Insight viewers

RISK WARNING

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC
        Back

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

        register_ty

        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com