EUR/USD Price, Chart and Analysis
- US inflation, the FOMC, and the ECB rate decision are all around the corner.
- The UK jobs market remains strong, supporting sterling.
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How to trade EUR/USD
With both the Federal Reserve (Fed) and the European Central Bank (ECB) announcing their latest monetary policy decisions over the next two days, markets strongly expect the Fed to halt its fourteen-month hiking cycle, while the ECB hikes rates. Will do A further 25 basis points. Both these outcomes are completely expected and the market has priced in, although post-decision commentary from both central banks will be crucial. Ahead of these two policy decisions, the May US inflation report is released later today, in which forecasters expect price pressures in the US to ease, but not at a particularly accelerated rate. Either way, the lack of expectations today could give the US dollar a chance for volatility ahead of Wednesday’s FOMC decision.
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EUR/USD is testing a former level of resistance below 1.0800 just ahead of today’s inflation report and reached a two-week high today. The pair will remain trapped in a small range ahead of the US CPI unless there is a major divergence from expectations, before settling into a holding pattern ahead of Wednesday’s FOMC decision.
EUR/USD Daily Price Chart – June 13, 2023
charts via tradingview
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Retail trading sentiment is mixed
Retail trader data shows that 59.86% of traders are net-long, reducing the ratio of traders to 1.49 to 1. The number of traders net-long is 6.98% higher than yesterday and 8.88% lower than last week, while the number of traders net-short is 2.14% lower than yesterday and 6.55% higher than last week.
We generally take a contrary view to the crowd sentiment, and the fact that traders are net-long suggests that the EUR/USD price may continue to decline. The positioning is more net-long than yesterday but less net-long than last week. The combination of current sentiment and recent changes gives us a more mixed EUR/USD trading bias.
The British pound edged higher again today after the latest UK jobs report showed the unemployment rate is back at 3.8%, while UK wages rose by a strong 7.2%. These figures, while good for the UK economy, will give the Bank of England cause for concern in its fight against inflation and push BOE hawks to continue hiking UK bank rate.
GBP Breaking News: Searing UK Jobs Report Boosts the Pound
EUR/GBP has moved steadily down over the past six weeks as traders price in higher UK terminal rates. As expected, the widening of the EU/UK interest rate differential has printed EUR/GBP this week at a multi-month low around 0.8540 and the decline will continue in the coming weeks with the next level of support at 0.8500. Can A big selloff could see 0.8340 as the final target.
EUR/GBP Daily Price Chart – June 13, 2023
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