EUR/USD Clinging on to 1.1000, Inflation Data Nears

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EUR / USD Price, Chart and Analysis

  • EUR / USD – A confirmed break of 1.1000 will set a run at 1.0800
  • Inflation data from the single block can accumulate pressure on the ECB.

The rise in receptive Fed rhetoric, and the striking move higher in U.S. Treasury bond yields, continue to apply downward pressure on EUR / USD with the pair clinging to the 1.1000 level. Small higher moves are encountered with sellers, while any recent dip below the 1.1000 sees buyers resurface to try to stabilize the pair. Whether larger forces play holding EUR / USD will soon come a time when lower moves will accelerate, due to the widening yield gap between USTS and Bunds, leaving the recent two-year low just above 1.0800 at risk. The Federal Reserve is expected to fully raise rates by another 150 basis points this year and begin reducing its balance sheet by $ 9 trillion +, while the ECB may move rates marginally higher by the end of 2022 if their growth outlook allows. The yield difference between the 10-year UST and the Bund is already +90 basis points in favor of the US dollar.

Euro Fund Forecast: EUR / USD Clinging to 1.1000, Inflation Data Near

The latest Eurozone inflation data will be released next week and is expected to show pressures that continue to rise across the single block. With the ECB currently unable to tighten monetary policy for fear of disrupting an already weak economic recovery, it will be up to ECB board members to try to jaw the single currency higher. This is unlikely to have any medium- to long-term impact if inflation pushes ever higher. German headline inflation is expected to rise to 6.1% next week, from 5.1% in February, a level that was last seen in the early 1990s.

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Daily Price of EUR / USD – March 25, 2022

Euro Fund Forecast: EUR / USD Clinging to 1.1000, Inflation Data Near

Retailer data shows62.12% of traders are net-long with the ratio of long to short traders at 1.64 to 1. The number of net-long traders is 1.95% higher than yesterday and 18.00% higher than last week, while the number of net-short traders is 1.89% lower than yesterday and 0.71% lower than last week.

We usually take the opposite view of crowd sentiment, and the fact that traders are neatly long suggests that EUR / USD prices will continue to fall.Traders are longer than yesterday and last week, and the combination of current sentiment and recent changes gives us stronger EUR / USD bearish opposite trading bias.

What is your opinion the EURO – bullish or bearish ?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @ nickcawley1.



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