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EUR / USD June open range vulnerable as ECB sticks to higher PEPP

EUR / USD rate talking points

Euro / US dollar Struggling to maintain a rebound from the monthly lows (1.2104) European Central Bank (ECB) Maintaining the current course of monetary policy, the exchange rate starts a series of lows and lows, which could threaten the June opening.

EUR / USD June open range vulnerable as ECB sticks to higher PEPP

Euro/U.S. dollar ECB “Eurozone Economic Outlook”Board expects net purchase under PEPP (Pandemic emergency purchase program) Over the next quarter, it will continue to take place at a significantly faster pace than in the first few months of this year.

The ECB seems reluctant to switch gears as European lawmakers haven’t deployed yet Next generation EU recovery package, And it’s like a president Christine Lagarde And Co. will open a monetary union over the next few months.Sufficient monetary easing is needed to support economic activity and a solid convergence of inflation below 2% in the medium term, but close to it.

Similarly, the Governing Council may continue to support dovish forward guidance as President Lagarde.Be prepared to adjust all commodities as needed to ensure that inflation continues towards its goals., “And the euro may face headwinds before the next ECB interest rates As a decision on July 22 Eurozone recovers from technological recession..

Nonetheless, retail sentiment is likely to continue its tilt as traders have been net shorting the euro / US dollar since April. IG Client Emotion Report Display only 35.47% of traders are net long As a pair Ratio of short traders to long traders stand 1.82 to 1.

Netlong traders are 3.91% less than yesterday, 23.46% less than last week, and netshort traders are 8.20% less than yesterday and 14.91% more than last week. The sharp drop in net long positions comes as EUR / USD Difficult to maintain a rebound from the monthly low (1.2104)On the other hand, 38.50% of traders were net long prior to the ECB rate decision, so rising net short interest rates are fueling congestion behavior.

That said It remains to be seen if the decline from the January high (1.2350) turns out to be a broader trend correction rather than a change in EUR / USD behavior as congestion behavior from 2020 resurfaces. not.However, the exchange rate is Threatens the opening range of June As it is I’m having a hard time maintaining a rebound from the monthly low (1.2104).

EUR / USD rate daily chart

EUR / USD rate daily chart image

Source: Trading view

  • Keep in mind that EUR / USD established a descending channel after a failed test attempt. April 2018 high (1.2414), But The drop from the January high (1.2350) A broader trend correction rather than a change in market movements as the exchange rate trades back above the 50-day SMA (1.2088) to break out of the bearish trend.
  • Is Relative strength index (RSI) It showed similar dynamics as the oscillator flipped in front of the oversold territory and out of the downtrend, but a series of unsuccessful attempts to push beyond 70 showed that the indicator was in the overbought territory. It suggests that the bullish momentum will continue to weaken as it reverses forward.
  • As a result, the EUR / USD pair could threaten the June opening price and the monthly lows (1.2104)open 1.2080 (78.6% retracement) area, This is primarily consistent with the 50-day SMA (1.2088).
  • Next The area of ​​interest is around January 2010 (100% expansion), breaking through the May lows (January 1986). Bring Fibonacci overlaps from about 1.190 (78.6% expansion) to 1.1970 (23.6% expansion) On the radar.

— By David Song, Currency Strategist

Follow us on Twitter @DavidJSong



EUR / USD June open range vulnerable as ECB sticks to higher PEPP

Source link EUR / USD June open range vulnerable as ECB sticks to higher PEPP

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