CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Christine Lagarde gives a boost to EUR/USD

Over the weekend, ECB President Christine Lagarde blogged about monetary policy in the Euro Area.  The usually dovish-leaning Lagarde summarized her opinion by noting that because the inflation outlook has shifted notably upward, she expects net purchases under the Asset Purchase Plan to end very early in the third quarter (to be announced at the June ECB meeting?). She added that this would allow the ECB to lift rates at the July meeting and likely to exit negative interest rates by the end of the third quarter (September meeting?).  After that, the ECB would bring interest rates in line with a neutral rate based on the medium-term outlook of inflation.  In addition to Christine Lagarde’s comments, the German Ifo Business Climate for May released today was better than expected at 93, vs 91.4 expected and 91.9 in April.  The current conditions component was much stronger at 99.5 vs 97.3 prior while the expectations component was similar at 86.9 vs 86.8 in April.    

Everything you need to know about the ECB

On a daily timeframe, EUR/USD had been trading lower in an orderly downward sloping channel since May 2021, when the pair reached a higher of 1.2262.  However, on April 22nd, EUR/USD broke aggressively below the bottom trendline of the channel, near 1.0753, and fell within 9 pips of the 2017 lows at 1.0340 on May 13th.  Notice that the RSI was diverging with price as EUR/USD tested the 2017 lows, a sign that the pair may have been ready to move higher.  Since then, the pair has bounced and is currently retesting the bottom trendline of the long-term channel.

Source: Tradingview, Stone X

 

Trade EUR/USD now: Login or Open a new account!

• 
Open an account in the UK
• 
Open an account in Australia
• 
Open an account in Singapore

 

On a 240-minute timeframe, EUR/USD has broken above the 38.2% Fibonacci retracement from the highs of March 31st to the lows of May 13th at 1.0668 and is testing horizontal resistance, the bottom, downward sloping trendline of the long-term channel, and the psychological round number resistance at 1.0700.  Above there, price can run to a confluence of resistance between the April 14th lows at 1.0757 and the 50% retracement from the above-mentioned timeframe at 1.0766.  The next level of resistance is the 50 Day Moving Average near 1.0772.  However, notice on the shorter timeframe that the RSI is in overbought territory, an indication price may be ready to pullback.  Horizontal support sits below at 1.0683 and 1.0506.  Below there, price can fall to the May 13th lows of 1.0349.

Source: Tradingview, Stone X

With Christine Lagarde laying the groundwork for upcoming ECB rate hikes, EUR/USD has continued its recent bid higher.  Throw in the better than expected German Ifo, and EUR/USD has rallied over 100 pips on the day.  Can it continue?  It will if the pair can break through 1.0700 and the RSI on the 240-minute timeframe can unwind into neutral territory!

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024