EUR/USD Bulls Eye $1.0950 on US Consumer Confidence and ECB Chat

Highlights

• The EUR/USD found support this morning as investors await US consumer confidence numbers.
• German Ifo Business Climate Index figures weighed on the EUR/USD early in the Monday session.
• However, it is a quiet day on the European economic calendar, leaving ECB chatter and the US economic calendar in focus.

It is a quiet start to the day for the EUR/USD. There are no euro area economic indicators for investors to consider today. The lack of economic indicators will likely leave the EUR/USD on the defensive ahead of the US session.

Disappointing German business sentiment numbers for June aligned with the prelim private sector PMI survey, with sentiment waning at the end of the quarter.

In June, the German Ifo Business Climate Index fell from 91.5 to 88.5 versus a forecasted 90.7. Significantly, the Expectations Index tumbled from 88.3 to 83.6, with the Current Assessment Index declining from 94.8 to 93.7. Economists forecast more modest declines to 88.0 and 93.5, respectively.

With no economic indicators to consider today, investors should monitor ECB commentary throughout the day. ECB President Christine Lagarde and ECB Executive Board Members Isabel Schnabel, Frank Elderson, and Fabio Panetta are on the calendar to speak today. Dovish July sentiment or hawkish September policy intentions would need consideration.

EUR/USD Price Action

This morning, the EUR/USD was up 0.20% to $1.09272. A mixed start to the day saw the EUR/USD fall to an early low of $1.09019 before rising to a high of $1.09351. The EUR/USD broke through the First Major Resistance Level (R1) at $1.0921.

Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The EUR/USD sits above the 50-day EMA ($1.09012). The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above R1 ($1.0912) and the 50-day EMA ($1.09003) would support a breakout from R2 ($1.0937) to give the bulls a run at $1.0950.

However, a fall through R1 ($1.0912) and the 50-day EMA ($1.09003) would signal a fall through S1 ($1.0889) to bring S2 ($1.0871) and the 100-day EMA ($1.08663) into play. A fall through the 50-day EMA would send a bearish signal.

Resistance & Support Levels

The US Session

Looking forward to the US session, US core durable goods and CB Consumer Confidence numbers will draw interest. A fall in the CB Consumer Confidence Index to below 100 would likely overshadow upbeat core durable goods orders.

Other stats include US new home sales, building permits, and house price numbers. However, these are unlikely to influence market sentiment toward Fed monetary policy.

This morning, bets on a July Fed interest rate hike remained elevated despite manufacturing sector woes. According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 75.6% versus 71.9% on Friday.

Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 11.3%, down from 11.5% on Friday, easing bets on a further widening in monetary policy divergence in favor of the greenback.