Eur/usd remains in consolidation amid mixed economic signals

EURUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0%	0.3 Pips
Week to-date	-0.56%	-64.1 Pips
June	1.19%	135 Pips

Upcoming key events (London Time)

Thu 08:30 AM EUR European Central Bank’s President Christine Lagarde speech

What happened lately

In the United States, recent economic data reveal nuanced changes. The Federal Reserve’s interest rate projections underwent slight modifications, with the second year’s rate rising to 3.4% and the first year’s rate increasing to 3.6%. However, the rate for the third year remained unchanged at 3.9%, and the Federal Funds Rate held steady at 4.5%. An improvement in the labor market was noted with initial unemployment claims dropping to 245K. Contrarily, there were declines seen in the housing sector with building permits and housing starts both decreasing in May. Industrial production also slightly fell by 0.2%. Retail trade, a crucial economic indicator, showed a decrease of 0.9% in May, although the retail trade control group saw a slight increase of 0.4%.

In the Euro Area, inflation dynamics remained stable with the Harmonized Index of Consumer Prices (HICP) for May reporting zero growth on both a monthly and annual basis, maintaining its 2.3% year-over-year figure. These indicators suggest stagnant price movements across the continent. Additionally, economic sentiment in the Euro Area showed noteworthy optimism in June, as the ZEW Economic Sentiment Index notably increased. This rise signals increased confidence among businesses and investors regarding future economic conditions.

For Germany, the ZEW Survey indicated a significant recovery in economic sentiment with the economic situation improving drastically from -82 to -72 points. Additionally, the Economic Sentiment Index experienced a notable rise, indicating an increased optimism about Germany’s economic outlook.

Regarding the EUR/USD currency pair, the economic news reflects a slightly stronger position for the U.S. dollar, as indicated by the nuanced improvements in economic forecasts and declines in unemployment claims. However, the housing and retail sectors’ downturns could potentially weigh against dollar strength. Alternatively, the Euro may receive a boost from the improved economic sentiment across the Euro Area. Considering these mixed dynamics, EUR/USD might remain in consolidation with limited volatility – oscillating based on forthcoming ECB insights, notably Christine Lagarde’s speech which could usher insights impacting the pair’s direction. Therefore, immediate significant impacts on EURUSD rates remain unlikely, although the Euro’s stability bolstered by better economic sentiment might provide underlying support against pronounced dollar gains.

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What can we expect from EURUSD today?

EURUSD on Wednesday dropped 0% to 1.14818. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.14515 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.15304 or trades above daily pivot 1.1491. Break above could target R1 at 1.15212. While to the downside, we are looking at 1.14515 (S1) and daily low of 1.14607 as support levels. EURUSD need to break on either side to indicate a short-term bias. A close below 1.14607 would indicate selling pressure.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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