The euro is still looking more bullish against the US dollar due to the situation with the ECB likely to raise rates more aggressively than other central banks.
ECB President Christine Lagarde this week continued with the hawkish rhetoric, echoing that rates will need to remain at restrictive levels for as long as is necessary, and left the door open for a hike at the next meeting.
ECB member Kazaks, a known hawk, said that he sees interest rates raising after July and emphatically rejected market expectations of rate cuts in 2024. However, the data agrees with Lagarde.
Top central bankers from the world’s largest central banks are arriving in Sintra Portugal for the ECB’s Forum on Central Banking. The annual event will see ECB president. Lagarde speaking again. Watch out for Euro specific movement.
Recently, the EURUSD pair has seen numerous upside failures seen around the 1.1000 area and the extremities of the year, close the 1.1100 area.
I would expect that the pair could eventually headed down towards 1.1300 level and then possibly 1.1500 later in the year if we see sustained strength above 1.1000.
The ActivTrader Sentiment tool suggests that just 39 % of traders are bullish on the EURUSD. This is still very good if we consider that traders are still that bearish despite the ongoing price rise.
As traders, we typically look to fade retail sentiment when it is overly skewed in one direction. This style of trading, fading sentiment, has been one of the most effective and used tactics of hedge funds.
The EURUSD is currently showing a bullish technical development as it continues to hold above the Ichimoku Cloud. The price has remained above the cloud since early June.
This above chart also shows clearly the price needs to move above the 1.0900 and 1.0860 area to change the short-term price trend for the EURUSD.
According to the daily time frame, the pair will form an important double bottom price pattern if we see a major price hold above the 1.0600 support region.
As long as the pair trades above the 200-day moving average, and the 1.0600 level we are likely to see a pending rebound towards the 1.1200 area.