The EURUSD exchange rate hovers around its peak levels from the beginning of May, following a significant increase which is the largest in the last 4.5 months.

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• EUR/USD seesaws near the highest levels since early May after rising the most in 4.5 months.

The pair currently trades last at 1.09463.

The previous day high was 1.0864 while the previous day low was 1.0774. The daily 38.2% Fib levels comes at 1.083, expected to provide support. Similarly, the daily 61.8% fib level is at 1.0808, expected to provide support.

EUR/USD makes rounds to 1.0950 as bulls catch a breather after a stellar run-up, the biggest since early February, amid sluggish hours of Friday’s Asian session. In doing so, the Euro pair also portrays the market’s need for more clues to defend the hawkish bias about the European Central Bank (ECB), as well as to confirm the doubts about the Federal Reserve’s (Fed) July rate hike.

That said, the European Central Bank (ECB) matched market forecasts by announcing a 25 basis points (bps) interest rate hike. More importantly, ECB President Christine Lagarde advocated for a July rate hike and ruled out rate cuts to allow the European Currency (Euro or EUR) to drum the victory over the previous day’s Federal Reserve’s (Fed) hawkish halt.

On the negative side, the ECB’s latest growth projections marked a softer economic run-up for 2023 and 2024 than previously estimated whereas ECB President Lagarde also stated that both growth and inflation are quite unpredictable.

On the other hand, the mixed US data and the Fed’s first status quo after fueling the rates in the last 10 consecutive meetings prod the US Dollar. With this, the US Dollar Index (DXY) bears take a breather at the lowest levels in over a month, flirting with 102.10 of late, after falling the most in three months by the press time.

Talking about the data, US Retail Sales growth marks an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, mean Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior. Further, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts. Additionally, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

Following the data, the CME’s FedWatch Tool, market players place nearly 67% bets on the July Fed rate hike of around 25 basis points (bps). The same depicts the traders’ lack of conviction in the Federal Reserve’s (Fed) almost clear signals for a hawkish move in July.

Against this backdrop, Wall Street benchmarks rallied more than 1.0% each whereas the US 10-year Treasury bond yields plummeted to 3.72%. Further, the US Dollar Index (DXY) dropped the most in three months while poking the lowest levels since May 12, to 102.15 at the latest.

Looking ahead, the final readings of Eurozone inflation data for May, as per the Harmonized Index of Consumer Prices (HICP) details, will precede the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations to direct immediate EUR/USD moves. Above all, bond market moves and the central bank clues should be eyed closely for clear direction.

The nearly overbought RSI (14) line suggests a pullback in the EUR/USD price towards the 50-DMA support of around 1.0880.

Technical Levels: Supports and Resistances

EURUSD currently trading at 1.0947 at the time of writing. Pair opened at 1.0828 and is trading with a change of 1.10% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.0749, 50 SMA 1.0878, 100 SMA @ 1.0806 and 200 SMA @ 1.0533.

The previous day high was 1.0864 while the previous day low was 1.0774. The daily 38.2% Fib levels comes at 1.083, expected to provide support. Similarly, the daily 61.8% fib level is at 1.0808, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.078, 1.0732, 1.069
• Pivot resistance is noted at 1.087, 1.0912, 1.0961

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