EURUSD faces a hectic day as the European Central Bank (ECB) takes center stage after the Federal Reserve's pause with a more hawkish stance. However, concerns arise as cracks begin to appear in the economy, creating uncertainty for the currency pair.
French inflation figures for May, set to be finalized, will draw interest alongside the Eurozone's trade data. While the trade data is expected to have more influence, unless there is an upward revision to the inflation numbers.
The ECB interest rate decision and subsequent press conference carry significant weight in shaping the EUR/USD. Economists anticipate a 25-basis point interest rate hike by the ECB, placing the fate of the currency pair in the hands of ECB President Christine Lagarde. This move would balance the scales after the recent hawkish pause by the Federal Reserve.
For forex traders, it is crucial to monitor the commentary from the ECB throughout the session. Additionally, the economic indicators from China, such as industrial production, fixed asset investment, and retail sales, have implications for riskier assets, including forex. These indicators provide insights into global economic trends that can impact forex markets.
The current price action of EUR/USD shows a slight decline of 0.10% to $1.08131, reflecting a mixed start to the day. Technical indicators suggest that the currency pair needs to surpass key resistance levels, such as the $1.0821 pivot and the First Major Resistance Level (R1) at $1.0867, to indicate a bullish session. Conversely, failure to move through these levels would maintain support levels and potentially lead to a bearish signal.
Looking ahead to the US session, the economic calendar is packed with notable events like US retail sales, jobless claims, and manufacturing data. Among these, retail sales and jobless claims are expected to have a stronger impact. Positive economic indicators could fuel early speculation of a peak Fed Funds Rate above 5.6%, shaping forex market sentiment and potential trading opportunities.