EUR/USD Climbs Higher as Markets Weigh Inflation and Rate Moves

Key Takeaways

• Financial Sector Steadies as Euro Gains Against Dollar
• German inflation figure, market rate expectations could impact Euro
• Dollar under pressure over concerns on Fed’s pause on rate hikes

Overview

The Euro is edging higher against the U.S. Dollar on Thursday as concerns over the banking sector receded, while investors switched focus to inflation for more hints on central banks’ next rate moves.

At 09:33 GMT, the EUR/USD is trading 1.0863, up 0.0019 or +0.17%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $100.11, down $0.08 or -0.08%.

Euro Value in Focus as Inflation and Rate Expectations Drive Markets

On Thursday, the Euro is expected to be influenced by various factors such as the preliminary inflation figure for Germany, lower-than-expected inflation in Spain, and the market’s rate expectations, which could impact the currency’s value. The Euro has gained 2% this month, which could positively impact its value.

Meanwhile, the dollar remains under pressure due to concerns that the Federal Reserve might pause rate hikes to control inflation. However, the financial sector has shown no signs of trouble, and regulators have calmed investors’ nerves. The upcoming US personal consumption expenditures data is expected to provide more information about inflationary pressures in the US economy.

Daily EUR/USD Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.0930 will signal a resumption of the uptrend. A move through 1.0517 will change the main trend to down.

The minor trend is also up. A trade through 1.0713 will change the minor trend to down. This will shift momentum.

The nearest support is a minor retracement zone at 1.0847 – 1.0821. The closest resistance is 1.0943.

Daily EUR/USD Technical Forecast

Trader reaction to 1.0847 and 1.0821 will determine the direction of the EUR/USD on Thursday.

Bullish Scenario

A sustained move over 1.0847 will indicate the presence of buyers. If this generates enough upside momentum then look for a surge into the resistance cluster at 1.0930 – 1.0943.

Bearish Scenario

A sustained move under 1.0821 will signal the presence of sellers. This could lead to a test of 1.0775, followed by a support cluster at 1.0723 – 1.0713.