EURUSD: is it a Neckline?
Previous week was a significant one for both USD and EUR, considering that inflation data were posted, as well as, both central banks held their meeting. Inflation data for the US was better from market estimates by 0.1%. Posted figures showed that the inflation rate in May dropped to the level of 4% y/y, from 4.9% posted in April. Core inflation dropped to the level of 5.3% from 5.5% posted for a previous month. The Producer Price Index in the US for May was -0.3% which was better than the market estimate of -0.1%, indicating that the inflation might further be decreased in the coming period. At the same time, inflation in the Eurozone dropped to the level of 6.1% in May from 7.0% in April but still, remained elevated above the ECB target. This was one of the main reasons why ECB continued with its rate increase by 25 bps, where ECB President Lagarde noted that further increases are coming. On the other hand, the Fed decided to pause rate increases at June`s FOMC meeting, in order to review implications of current measures on the US economy. Still, Fed Chair Powell noted that this does not represent a halt on further increases, where two more rate hikes are coming till the end of this year.
During the week Euro was supported by the new ECB monetary measures, so the currency gained against USD, trading from 1.073 up to 1.097. The currency pair finished the week modestly below this level. By reaching the level from the beginning of February, the pair formed so-called neckline formation in the technical analysis. This is an indication of a potential reversal within a short period of time. The RSI was strongly pushed to the upside, reaching the level of 63, however, a clear overbought market has not been reached. In case that this level is reached in the coming days, it would most certainly indicate a short-term reversal. Moving average of 50 days continues to move in parallel with its MA200 counterpart, without an indication that the cross might come in the coming period.
Technical analysis is currently pointing to a potential for a short term reversal path for currency pair. However, there is potential for a clear testing of a 1.100 level, before the reversal starts, where the level of 1.09 might be tested for one more time.
Important news to watch during the week ahead are:
Euro: Current account and Construction output data are scheduled for a release in a coming week, but with currently lower significance
USD: Building permits for May, Fed Chair Powell Testimony is scheduled for June 21st
During the week Euro was supported by the new ECB monetary measures, so the currency gained against USD, trading from 1.073 up to 1.097. The currency pair finished the week modestly below this level. By reaching the level from the beginning of February, the pair formed so-called neckline formation in the technical analysis. This is an indication of a potential reversal within a short period of time. The RSI was strongly pushed to the upside, reaching the level of 63, however, a clear overbought market has not been reached. In case that this level is reached in the coming days, it would most certainly indicate a short-term reversal. Moving average of 50 days continues to move in parallel with its MA200 counterpart, without an indication that the cross might come in the coming period.
Technical analysis is currently pointing to a potential for a short term reversal path for currency pair. However, there is potential for a clear testing of a 1.100 level, before the reversal starts, where the level of 1.09 might be tested for one more time.
Important news to watch during the week ahead are:
Euro: Current account and Construction output data are scheduled for a release in a coming week, but with currently lower significance
USD: Building permits for May, Fed Chair Powell Testimony is scheduled for June 21st
Penerbitan berkaitan
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.