Incoming ECB Rate Increases
The EUR/USD pair was trading just a tad above the 1.0725 zone. It was a slow trade while the market prepared for a busy week.
The European Central Bank is set to announce a new monetary policy this month June. It is also expected that the bank will finalize its plan for positive interest rates by the end of the third quarter.
EUR/USD price chart. Source TradingView
Traders are equally out to weigh the tone of President Lagarde’s speech on the possibilities of more policy tightening. The European Central Bank’s President speech will help the market measure its perspective for the coming year.
Whereas in the United States, the consumer price index is up for publication on Friday. It could have a huge impact on the expected policy of the Federal Reserve.
Slow Start for a Week
However, the first three days of this week will all be calm with regard to economic data and central bank events. This means that the EUR/USD pair might be taking a cue from events like the market’s sentiment and geopolitical events.
It further indicates that the EUR/USD pair might just remain glued with the recent low point at 1.0600 to 1.0700 range. The 50-period daily moving average is possibly going to act as a magnetic force. It has, by and large, been the situation for a couple of days.
Financial strategists are thinking that the case to push beyond 1.0800 is feasible for the pair later this week or the next. This is if the ECB becomes visibly hawkish and inflation in the US gives signs of slowing down. The 1.0800 area is the highest point the pair has seen since April.
In the United States, increasing momentum pushing the US highest hawkishness drives the latest rebound. It is, in fact, the major driver of the rebound since the low point of last month below 1.0400.
Meanwhile, the market experienced a slow start this week due also to holidays in France, Switzerland, Germany, and New Zealand. Nevertheless, the risk market got an improvement in the early hours of Monday before sliding again when markets opened in the US.
The first optimism of the market might be connected to the ability of China to subdue the COVID pandemic. The country also mentioned its preparations to bounce back from the losses incurred. The news about President Joe Biden easing his stand on China and a willingness to lift Trump-era sanctions.