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the euro puts pressure on the dollar thanks to the ECB while waiting for the US CPI


Article Highlights on the EUR/USD price:

  • Euro blames height thanks to ECB, but US CPI to be decided later
  • EUR/USD retests the upper boundary of its long-term descending channel

Euro blames height thanks to ECB, but US CPI to be decided later

The price of EUR/USD has rebounded strongly in recent days against the background of the acceleration of monetary tightening by the ECB. The European Central Bank raised its peaks by 75 basis points last week, a first in its history, which benefited the currency since such a rise was not yet fully priced into the market.

The euro also benefited from the relatively hawkish rhetoric of some members of Christine Lagarde, who felt it was not yet neutral and that it would take less than five monetary policy meetings to get there, taking into account that of September. The President of the German Central Bank, Joachim Nagel, then prepared the ground on Sunday for further “significant” interest rate hikes in the face of soaring inflation, despite the risk of a decline that precise. In short, the ECB accepted discussions on reducing its balance sheet at the start of October.

All these hawkish announcements in such a short time naturally benefit the single currency, which is back to its highest level since mid-August near $1.02. Nevertheless, the publication of inflation in the United States on Tuesday afternoon could put an end to the rebound if it came out higher than expected. Expected up 8.1% on one and 6.1% for core inflation, a reading above expectations would increase the chances of seeing the Fed adopt an even more hawkish attitude by notably raising its rate by 75 basis points this week. next . The probability of this scenario is currently 86.0%. On the contrary, a reading below the attention would reduce the odds of such a large rate hike, but this scenario should remain favored.

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EUR/USD retests the upper boundary of its long-term descending channel

chart Daily EUR/USD price realized on TradingView:

According to the blueprint of the technical analysis, the EUR/USD’s comeback after the last week allowed it to come back to test the top of the descending channel in which it has been moving since early spring. The return/risk ratio therefore becomes again in favor of the sellers at the real price level.

A draw for the top of the channel is possible if the US station inflation is below that, and you pay attention to it afternoon, which will open the door for some of the rebound just after mid-year. approximately $1.0350.

Nevertheless, the underlying outlook would still remain bearish. Indeed, the funds are geared towards the economy for the euro with the energy crisis and the global economic slowdown, they fail to witness the advancement of the head of the table forecast on a more bullish return, such as a departure of the moving average at 200 sessions. A more bullish return of the euro would risk more than US inflation losing the advantage predicted by the pro-chains and expectations of an ECB rate hike increasing the advantage.

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