EUR/USD Bulls to Target $1.1150 on a Hawkish ECB President Lagarde

It is a busy day ahead for the EUR/USD. This morning, German trade data will draw interest before services and composite PMIs for Italy and Spain. Finalized PMIs for France, Germany, and the Eurozone will also influence. However, we expect the Italian and Eurozone PMIs to have more impact.

Investors should consider the headline numbers, the input and output prices, new orders, and employment components.

While the stats will draw interest, the ECB monetary policy decision and press conference will be the main event. Economists forecast a 25-basis point interest rate hike. However, the ECB hawks will likely push for a 50-basis point move following the April prelim inflation figures.

With a busy economic calendar to navigate, investors should monitor ECB member commentary. No Executive Board members are on the calendar to speak today, leaving chatter with the media to move the dial. A lack of chatter would leave ECB President Christine Lagarde to influence during the ECB press conference.

EUR/USD Price Action

This morning, the EUR/USD was up 0.21% to $1.10822. A mixed start to the day saw the EUR/USD fall to an early low of $1.10549 before rising to a high of $1.10876.

Technical Indicators

Resistance & Support Levels

The EUR/USD needs to hold above the $1.1049 pivot to target the First Major Resistance Level (R1) at $1.1102. A move through the Wednesday high of $1.1092 would signal a bullish session. However, the EUR/USD needs euro area economic indicators and the ECB to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.1145. The Third Major Resistance Level (R3) sits at $1.1240.

A fall through the pivot would bring the First Major Support Level (S1) at $1.1007 into play. However, barring an ECB-fueled sell-off, the EUR/USD pair should avoid sub-$1.10 and the Second Major Support Level (S2) at $1.0954. The Third Major Support Level (S3) sits at $1.0859.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The EUR/USD sits above the 50-day EMA ($1.10111). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.10111) would support a breakout from R1 ($1.1102) to give the bulls a run at R2 ($1.1145). However, a fall through the 50-day EMA ($1.10111) and S1 ($1.1007) would bring the 100-day EMA ($1.09835) and S2 ($1.0954) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. US jobless claims, nonfarm productivity, and unit labor costs will draw interest before Friday’s US Jobs Report.

Hotter-than-expected unit labor costs and a fall in jobless claims would fuel bets on more Fed interest rate hikes.

While investors will consider the stats, the banking sector, the US debt ceiling, and corporate earnings will influence market risk sentiment. Big names on the US earnings calendar include Apple (AAPL), ConocoPhillips (COP), Shopify Inc. (SHOP), and Moderna (MRNA).